HONEYWELL
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March , 1997
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders,
which will be held at 2:00 p.m., Tuesday, April 15, 1997, at The Wrigley
Conference Center, 2501 East Telawa Trail, Phoenix, Arizona.
o You will find a Notice of Meeting on Page 1 that identifies the four
proposals for your action.
o At the meeting we will present a report on Honeywell's 1996 business
results and on other matters of current interest to our shareholders.
o If you plan to attend the meeting in Phoenix, please check the appropriate
box on your proxy card and detach the admission card to present at the
meeting registration tables.
o We will be providing refreshments prior to the meeting, which will be
available beginning at 1:00 p.m. Please also take this opportunity to view
Honeywell products and services, which will be displayed at the meeting.
YOUR VOTE IS IMPORTANT. We encourage you to read this Proxy Statement and
sign and return your proxy card in the enclosed envelope as soon as possible, so
that your shares will be represented at the meeting.
Sincerely,
/S/ Michael R. Bonsignore
- --------------------------------
Michael R. Bonsignore
Chairman of the Board and Chief Executive Officer
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
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PAGE
----
NOTICE OF MEETING ......................................................
VOTING PROCEDURES ......................................................
HONEYWELL BOARD PRACTICES ..............................................
DIRECTOR COMPENSATION ..................................................
BOARD MEETINGS--COMMITTEES OF THE BOARD ................................
ITEM 1--ELECTION OF DIRECTORS ..........................................
Nominees .......................................................
ITEM 2--APPROVAL OF AUDITORS ...........................................
ITEM 3--APPROVAL OF PROPOSED 1997 HONEYWELL STOCK AND INCENTIVE PLAN ...
ITEM 4--PROPOSED ELIMINATION OF ARTICLE XII OF HONEYWELL'S BY-LAWS .....
STOCK OWNERSHIP INFORMATION ............................................
Stock Ownership Reporting .....................................
Stock Ownership Guidelines ....................................
Stock Ownership of Directors and Executive Officers ...........
EXECUTIVE COMPENSATION .................................................
Summary Compensation Table ....................................
1996 Option Grants Table ......................................
1996 Option Exercises and Year-End Values Table ...............
Long-Term Incentive Plan--Awards Table ........................
Report on Executive Compensation ..............................
Performance Graph--Shareholder Returns ........................
Change in Control and Termination Arrangements ................
Pension Plan Table ............................................
OTHER INFORMATION ......................................................
Director Nominations ..........................................
Shareholder Proposals for 1997 ................................
Expenses of Solicitation ......................................
YOUR VOTE IS IMPORTANT
Please complete, date and sign your proxy card and promptly return it in
the enclosed envelope.
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HONEYWELL
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HONEYWELL INC., HONEYWELL PLAZA, MINNEAPOLIS, MINNESOTA 55408
Notice of Annual Meeting of Shareholders:
The Annual Meeting of Shareholders of Honeywell Inc. will be held at The Wrigley
Conference Center, 2501 East Telawa Trail, Phoenix, Arizona, Tuesday, April 15,
1997, at 2:00 p.m. for the following purposes:
1) to elect eleven directors;
2) to approve the selection of Deloitte & Touche LLP as independent auditors;
3) to approve the proposed 1997 Honeywell Stock and Incentive Plan;
4) to approve the elimination of Article XII of Honeywell's By-laws,
which imposes a maximum amount of incentive compensation;
and to transact any other business appropriate to the meeting.
Record Date
The Board of Directors has fixed the close of business on February 14, 1997 as
the record date for the purpose of determining shareholders who are entitled to
notice of and to vote at the meeting A list of shareholders entitled to vote at
the meeting will be available during business hours for ten days prior to the
meeting at the Company's offices, Honeywell Plaza, Minneapolis, Minnesota, for
examination by any shareholder for any purpose germane to the meeting.
Proof of Ownership
Attendance at the meeting will be limited to shareholders of record or their
authorized representative by proxy. If your shares are held through an
intermediary, such as a bank or broker, you should request a ticket from the
intermediary, or present proof of your ownership of Honeywell shares at the
meeting. Proof of ownership could include a proxy from the intermediary or a
copy of your account statement, which confirms your beneficial ownership of
Honeywell shares.
By Order of the Board of Directors,
March __, 1997
/s/ Sigurd Ueland
- --------------------------------
Sigurd Ueland
Secretary
<PAGE>
PROXY STATEMENT--VOTING PROCEDURES
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YOUR VOTE IS VERY IMPORTANT.
Whether or not you plan to attend our Annual Meeting of Shareholders, please
take the time to vote by completing and mailing the enclosed proxy card as soon
as possible. We have included a postage-prepaid envelope for your convenience.
If you sign, date and mail your proxy card without indicating how you want
to vote, your proxy will be voted as recommended by the Board of Directors.
Revoking Your Proxy
If you later wish to revoke your proxy, you may do so by: (a) sending a
written statement to that effect to the Secretary of the Company; (b) submitting
a properly signed proxy with a later date; or (c) voting in person at the annual
meeting.
Voting by Saving Plan Participants
If you own Honeywell shares as a participant in Honeywell's Savings Plans,
you will receive a single proxy card that covers both shares credited to your
plan account and shares you own of record that are registered in the same exact
name. If your plan account is not registered in the same name as your shares of
record, you will receive separate proxy cards for your record and plan holdings.
Proxies executed by plan participants will serve as voting instructions to T.
Rowe Price Trust Company, the trustee for these plans.
Vote Required and Method of Counting Votes
O Number of Shares Outstanding. At the close of business on the record date,
February 14, 1997, there were 126,755,156 shares of Honeywell common stock
outstanding and entitled to vote at the annual meeting.
o Vote Required. The following is an explanation of the vote required for
each of the four items to be voted on at the annual meeting.
Item 1 - Election of Directors.
The eleven nominees receiving the highest number of votes will be elected.
Shareholders who do not wish their shares to be voted for a particular nominee
may so indicate in the space provided on the proxy card.
Item 2 - Approval of Auditors, and Item 3 - Approval of 1997 Honeywell Stock and
Incentive Plan.
The affirmative vote of a majority of shares present in person or by proxy
is required for approval of Items 2 and 3. Shares represented by proxy which are
marked "abstain" will not be counted in the vote total and will have no effect
on the vote. A "broker non-vote" (i.e., when a broker does not have authority to
vote on a specific issue) will have no effect on the vote.
Item 4 - Elimination of Article XII of Honeywell By-laws.
The affirmative vote of a majority of the outstanding shares of Honeywell
is required for approval of Item 4. Therefore, any shares that are not voted,
including shares represented by proxy which are marked "abstain" and any "broker
non-vote", will have the effect of a vote against Item 4.
Other Business.
The Board knows of no other matters to be presented for shareholder action
at the meeting. If other matters are properly brought before the meeting, the
persons named in the accompanying proxy card intend to vote the shares
represented by them in accordance with their best judgment.
Confidential Voting Policy
Honeywell maintains a policy of keeping shareholder votes confidential.
2
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HONEYWELL BOARD PRACTICES
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Corporate governance practices continue to generate a significant amount of
public attention. In order to help our shareholders understand the corporate
governance practices at Honeywell, we are including below a description of the
practices that the Honeywell Board currently follows. The Nominating and
Governance Committee reviews these practices each year. As part of its review,
the Committee also evaluates board practices at other well-managed companies and
practices that are the focus of commentators on corporate governance. Following
its review, the Committee recommends any changes it feels are appropriate to the
Board. In January 1997, the Board approved the following practices and
recommended that these practices be communicated to shareholders in this proxy
statement.
CEO Performance Evaluation
At the beginning of each year, the CEO presents his performance objectives
to the non-employee directors for their approval. At the end of each year, the
non-employee directors evaluate the CEO's performance against these performance
objectives. Each non-employee director provides an anonymous, written evaluation
of the CEO's performance to the Chairman of the Nominating and Governance
Committee, who prepares an appraisal report that covers the views expressed by
the non-employee directors. The non-employee directors then meet privately to
discuss the CEO's performance and to agree on the content of the appraisal,
which the Chairman of the Nominating and Governance Committee later reviews with
the CEO. The Personnel Committee uses this performance evaluation in the course
of its deliberations when considering the compensation of the CEO.
Board Performance Evaluation
With the goal of increasing the effectiveness of the Board and its
relationship to management, the Nominating and Governance Committee evaluates
the Board's performance as a whole. The evaluation process, which occurs every
two years, includes a survey of the individual views of all non-employee
directors, which are then shared with the full Board and with management.
CEO Succession
The Board views CEO selection as one of its most important
responsibilities. The CEO reports annually to the Nominating and Governance
Committee on planning for CEO succession either in the event of a sudden
emergency or, longer range, when it is time for the CEO's retirement. When a
succession of the CEO occurs, this Committee manages the process of identifying
and selecting the new CEO with the full participation of each of the
non-employee directors and the current CEO.
Board Size and Composition
The Board presently has 12 directors, consisting of ten non-employee
directors and two employee directors. The Board believes that approximately 10
to 15 members is an appropriate size for the Honeywell Board. The Board also
believes that the Honeywell Board should be made up of a substantial majority of
independent, non-employee directors. The Nominating and Governance Committee
reviews annually the appropriate skills and characteristics required of Board
members in light of the current make-up of the Board. This assessment includes
issues of diversity, age, and skills such as understanding of manufacturing,
finance, marketing, technology, regulation and public policy, international
background, etc. The principal qualification for a director is the ability to
act on behalf of all of the shareholders.
Selection of Directors
The Board is responsible for selecting its own members. The Board delegates
the screening process to the Nominating and Governance Committee with direct
input from the chairman and chief executive officer and from the other
directors. This Committee annually reviews employment and other relationships of
directors, and the Board believes there is no current relationship between any
non-employee director and Honeywell that would be construed in any way as
compromising the independence of any director.
Director Retirement
Non-employee directors must retire at the annual meeting following the
first to occur of (1) age seventy, or (2) fifteen years of service as a
director. Directors who change the occupation they held when initially elected
are expected to offer to resign from the Board. At that time, the Nominating and
Governance Committee reviews the continued appropriateness of Board membership
under these new circumstances. The Board has adopted a policy calling for
employee directors, including the CEO, to retire from the Board at the time of a
change in their status as an officer of Honeywell, although in special
circumstances the Committee may request a former CEO to continue as a director
for a maximum of one year.
3
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Director Compensation
Each year Honeywell staff presents a report to the Nominating and
Governance Committee that compares Honeywell Board compensation to director
compensation at peer companies, which are benchmarks for the Company's financial
performance. It is the Board's policy that a significant portion of director
compensation be in the form of Honeywell stock or stock equivalent units.
Board Agendas and Meetings
The chairman and chief executive officer establishes the agendas for Board
meetings. Each director is free to suggest items for the agenda, and each
director is free to raise at any Board meeting subjects that are not on the
agenda for that meeting. The Board reviews and approves Honeywell's yearly
operating plan and specific financial goals at the start of each year, and the
Board monitors performance throughout the year. The Board also reviews
long-range strategic issues at regular Board meetings as well as at periodic,
multi-day off-site meetings devoted solely to strategic issues.
Executive Sessions of Outside Directors
The non-employee directors meet privately in executive sessions to review
the performance of the CEO and to review recommendations of the Personnel
Committee concerning compensation for the employee directors. The non-employee
directors may also meet in executive session at other times during the year to
consider issues they deem important to consider without management present. The
Chairman of the Nominating and Governance Committee has been designated as the
individual whom other directors may ask to call a private meeting of
non-employee directors when they believe there is a need to discuss a matter
that could materially affect the performance of Honeywell. When non-employee
directors meet without the chairman and chief executive officer present, the
Chairman of the Board committee most relevant to the subject under discussion
will act as the chairman of the meeting.
Committees of the Board
The Board currently has the following committees: Audit, Finance,
Nominating and Governance, Personnel and Executive. Only non-employee directors
serve on the Audit, Finance, Nominating and Governance, and Personnel
Committees. At each meeting of the Audit Committee, Committee members meet
privately with representatives of Deloitte & Touche LLP, the Company's
independent auditors, and with the Company vice president responsible for
carrying out the internal audit function. The members of the Personnel Committee
meet privately several times during the year to discuss the compensation of the
employee directors and other issues that the Committee wishes to review.
DIRECTOR COMPENSATION
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The Board of Directors believes that a significant amount of director
compensation should be paid in stock. Compensation for non-employee directors is
payable under the Non-Employee Directors Fee and Stock Unit Plan, which was
approved by shareholders in 1996. Directors who are employees of Honeywell
receive no compensation for service on the Board.
The principal components of director compensation are as follows:
1) an annual retainer fee of $32,000;
2) a fee of $1,200 for each board or Committee meeting attended ($1,800
for a Committee Chairman); and
3) an award of stock units having a value equal to one-half of the annual
retainer and meeting fees paid to the director during the previous
year.
A director may choose to receive his or her annual retainer and meeting
fees in the form of: cash; stock units; or a combination of cash and stock
units. In order to encourage increased stock ownership, a director who chooses
to receive payment of his or her retainer or meeting fees in stock units, will
receive stock units having a value equal to 110 percent of these fees. While
stock units do not confer on a director the right to vote, each stock unit is
credited on each dividend payment date with stock units equal to the applicable
dividend payable on Honeywell common stock. The plan also provides a director
with the option of deferring fees that would be payable in cash and the deferred
amounts earn interest at Honeywell's corporate borrowing rate.
4
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BOARD MEETINGS--COMMITTEES OF THE BOARD
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The Board of Directors held eight regular and one special meeting during 1996.
The Executive Committee of the Board does not have scheduled meetings and did
not meet during the year. The Board maintains four other committees: Audit,
Finance, Nominating and Governance, and Personnel. Membership on these four
committees is limited to non-employee directors. Committees on which directors
serve are listed next to the pictures of directors on pages through .
Audit Committee
The Audit Committee met three times in 1996. The primary functions of the Audit
Committee are to:
o Establish and review the activities of the independent auditors and the
internal auditors;
o Review and approve the format of the financial statements to be included in
the annual report to the shareholders;
o Review recommendations of the independent auditors and responses of
management;
o Review and discuss Honeywell financial reporting, loss exposures and asset
control with the auditors and management;
o Monitor the Honeywell program for compliance with policies on business
ethics; and
o Direct and supervise any special investigations the Committee deems
necessary.
Finance Committee
The Finance Committee met four times in 1996. The primary responsibilities
of the Finance Committee are to review the financial structure, policies and
future plans of the Company as developed and presented by management and to make
recommendations concerning them to the Board. In carrying out these functions
the Committee periodically reviews:
o The financial constraints within which the Company will operate, such as
debt-equity ratio, coverage of fixed charges, and other financial ratios;
o Proposed acquisitions or other investments that meet a certain financial
threshold;
o Company debt and credit arrangements;
o Proposals for obtaining additional capital funds or other changes in the
capitalization of the Company;
o Dividend and tax policy;
o Foreign exchange exposure and risks;
o The Company's various retirement and pension plans; and
o Investment banker relationships and investors relations.
Nominating and Governance Committee
The Nominating and Governance Committee met four times in 1996. The primary
functions of the Nominating and Governance Committee are to:
o Determine and recommend to the Board criteria regarding personal
qualifications currently needed for Board membership;
o Determine and recommend to the Board appropriate compensation for directors;
o Evaluate the performance of the Board as a whole and provide feedback to the
chief executive officer on how the directors and the Board are functioning;
o Establish the process for the Board to evaluate the chief executive officer
and other inside directors;
o Evaluate and recommend to the Board successors to the chief executive
officer and inside director positions when required;
o Annually evaluate Board practices at Honeywell and other well-managed
companies and recommend appropriate changes to the Board; and
o Consider governance issues raised by shareholders or other stakeholders in
the Company and recommend appropriate responses to the Board.
Personnel Committee
The Personnel Committee met five times in 1996. The primary functions of the
Personnel Committee are to:
o Review and report to the Board on the Company's programs for attracting,
retaining and promoting executives, and for developing future senior
management;
o Review and make recommendations to the Board regarding compensation for the
chief executive officer and other inside directors;
o Review and approve performance targets, participation and level of awards
for long-term incentive award plans; and
o Review, approve and report to the Board concerning administration of
compensation plans and compensation for executives at specified salary grade
levels.
The average attendance at meetings of the Board and Board Committees during
1996 was 97 percent.
5
<PAGE>
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ITEM 1--ELECTION OF DIRECTORS
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NOMINEES
Eleven directors of the Company are to be elected to serve until the 1998 Annual
Meeting of Shareholders and until their successors are elected and qualified.
All of the nominees are currently directors of the Company and were elected
directors at the 1996 Annual Meeting of Shareholders except Giannantonio Ferrari
who has been nominated to fill the vacancy that will be created when D. Larry
Moore retires as a director at the 1997 Annual Meeting. Mr. E. Hubert Clark,
Jr., currently a director, is not standing for reelection under the retirement
policy of the Board of Directors. Catherine M. Hapka, who was elected a director
in 1995, resigned in January 1997 due to a change in occupation.
The shares represented by your proxy card, will be voted, unless authority
to vote is withheld, `FOR' the election of the eleven nominees named on pages
____ through ____ . If any of the nominees should become unavailable, your
shares will be voted for a Board-approved substitute, or the Board may reduce
the number of directors.
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Albert J. Baciocco, Jr.
o Retired Vice Admiral
[PHOTO] United States Navy
o Director since 1988
o Member of Audit and Personnel
Committees of the Board
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Vice Admiral Baciocco, age 66, retired from the U.S. Navy in 1987 after 34 years
of distinguished service, principally within the submarine force and directing
the Department of the Navy research and technology development enterprise. He
graduated from the U.S. Naval Academy in 1953, receiving a bachelor's degree in
engineering. He subsequently completed graduate level studies in nuclear
engineering as part of his training for the naval nuclear propulsion program.
Upon retirement from the Navy, Admiral Baciocco formed The Baciocco Group,
Inc., a technical and management consulting practice providing services to
industry, primarily in areas of strategic planning, technology investment and
application, and business planning and development.
Admiral Baciocco serves on several boards and committees of government,
industry and academe. He is a member of the Army Science Board and the Naval
Studies Board of the National Research Council. He serves on the Board of
Trustees of the South Carolina Research Authority. In addition, he is a director
of Oak Ridge Associated Universities; the Waste Policy Institute, Virginia
Polytechnic Institute and State University; and the Foundation for Research
Development, Medical University of South Carolina; and is a member of the Board
of Visitors to the Software Engineering Institute, Carnegie Mellon University.
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Elizabeth E. Bailey
o John C. Hower Professor
of Public Policy and Management
The Wharton School, University
[PHOTO] of Pennsylvania
o Director since 1985
o Member of Finance and Nominating
and Governance Committees of the
Board
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Dr. Bailey, age 58, graduated from Radcliffe college and received an M.S. in
mathematics from Stevens Institute of Technology and a Ph.D. in economics from
Princeton University.
Dr. Bailey joined Bell Laboratories in 1960, where she held various
supervisory positions until 1977. From 1973 until 1977, she was also adjunct
professor of economics at New York University. In 1977, she was appointed a
commissioner of the Civil Aeronautics Board and was vice chairman of the Civil
Aeronautics Board from 1981 to 1983. From 1983 to 1990, she served as dean of
the Graduate School of Industrial Administration of Carnegie Mellon University.
From 1990 to 1991, she was a visiting scholar at Yale University, on leave from
Carnegie Mellon. Currently, Dr. Bailey is John C. Hower Professor of Public
Policy and Management at The Wharton School.
Dr. Bailey is also a director of Philip Morris Companies Inc., CSX
Corporation and the College Retirement Equities Fund. She is a past member of
the board of trustees of Princeton University, and she serves on the board of
the Brookings Institution, Bancroft, Inc., and the National Bureau of Economics
Research.
6
<PAGE>
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Michael R. Bonsignore
o Chairman of the Board and
Chief Executive Officer
[PHOTO] Honeywell Inc.
o Director since 1990
o Member of Executive Committee
of the Board
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Mr. Bonsignore, age 55, is a graduate of the U.S. Naval Academy and received a
degree in electrical engineering in 1963. He also pursued graduate work in ocean
science and engineering at Texas A & M University.
Mr. Bonsignore began his business career at Honeywell in 1969. He has held
various marketing and operations management positions and was named the
Company's vice president for Marine Systems in 1981. In 1983, Mr. Bonsignore was
appointed president for Honeywell Europe, headquartered in Brussels, Belgium. In
1987, Mr. Bonsignore returned to Minneapolis as the Company's executive vice
president, International, and was elected president of this business in May
1987. In 1990, Mr. Bonsignore was elected executive vice president and chief
operating officer for International, and Home and Building Control, and a
director of the Company. In April 1993, Mr. Bonsignore was elected chairman of
the board and chief executive officer.
Mr. Bonsignore is also a director of Cargill, Inc., Donaldson Company, Inc.
and The St. Paul Companies, Inc. He serves as a member on various advisory
boards and committees including: the U.S. - China Business Council, Investment
and Services Policy Advisory Committee (INSPAC), U.S. - Russia Trade and
Economic Council and the Alliance to Save Energy Board.
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William H. Donaldson
o Co-founder and Senior
Advisor Donaldson, Lufkin
& Jenrette, Inc.
[PHOTO] o Chairman and Chief Executive
Officer Donaldson Enterprises,
Inc.
o Director since 1982
o Member of Nominating and
Governance and Finance
Committees of the Board
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Mr. Donaldson, age 65, is a graduate of Yale University and received an MBA,
with distinction, from the Harvard University Graduate School of Business
Administration. He served as an officer in the United States Marine Corps.
In 1959, Mr. Donaldson co-founded Donaldson, Lufkin & Jenrette, Inc., an
investment banking firm, andin 1961, Alliance Capital Management Corporation, an
investment management firm, and served as chairman and chief executive officer
until 1973.
Mr. Donaldson was Undersecretary of State from 1973 to 1974. In 1975, he
served as special consultant and advisor to the Vice President of the United
States. During that year he became founding dean of the Yale Graduate School of
Management and was named William S. Beinecke Professor of Management Studies,
serving until 1980. Mr. Donaldson then founded Donaldson Enterprises, Inc., a
private investing firm, and served as its chairman and chief executive officer
until year-end 1990. From 1991 until June 1995, Mr. Donaldson served as chairman
of the board and chief executive officer of The New York Stock Exchange, Inc. In
June 1995, Mr. Donaldson rejoined Donaldson Enterprises, Inc., as its chairman
and chief executive officer. In September 1995, he was also elected senior
advisor to Donaldson, Lufkin & Jenrette, Inc., the firm he co-founded in 1959.
Mr. Donaldson is also a director of Aetna Life & Casualty Company and
Philip Morris Companies Inc. He serves as a trustee and director of a number of
philanthropic and educational institutions.
7
<PAGE>
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Giannantonio Ferrari
[PHOTO] o President and Chief Operating
Officer Honeywell Inc.
(effective April 15, 1997)
o Nominee
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Mr. Ferrari, age 57, is a graduate of the Catholic University of Milan, Italy
and received a degree as a chartered accountant in 1964.
Mr. Ferrari began his business career at Gavazzi SpA, a distributor for
Honeywell in Italy. He became one of the first employees of Honeywell Italia
when it was formed in 1965. Mr. Ferrari has held various managerial positions in
Italy, and in 1976 he was also appointed director of finance and human resources
for the Middle East region, and also assumed responsibility as general manager
for Honeywell Iran and Honeywell Greece. In 1981, he was appointed controller
for Honeywell Europe and, in 1984, he was elected vice president of finance and
director of distribution for Honeywell Europe. In 1988, Mr. Ferrari returned to
Italy and served as vice president, Western and Southern Europe, Middle East and
Africa. In January 1992, he was elected president of Honeywell Europe. In
January 1997, Mr. Ferrari was elected the Company's president and chief
operating officer, which will be effective on April 15, 1997.
Mr. Ferrari is a director of the European American Industrial Council
(EAIC) in Belgium.
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R. Donald Fullerton
o Chairman -- Executive
[PHOTO] Committee CIBC
o Director since 1992
o Member of Audit (Chairman)
and Finance Committees of
the Board
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Mr. Fullerton, age 65, graduated from the University of Toronto in 1953 and
received a B.A. degree.
In 1953, Mr. Fullerton joined the Canadian Bank of Commerce (now CIBC), a
Canadian financial services institution based in Toronto. In 1968, he was
appointed deputy chief general manager.
In 1971, Mr. Fullerton became senior vice president and in 1973, he was
promoted to executive vice president and chief general manager. Mr. Fullerton
was elected to CIBC's Board of Directors in 1974 and elected president and chief
operating officer in 1976. In 1984, he was elected chief executive officer, and
in 1985, he was named chairman.
In June 1992, Mr. Fullerton retired as chairman and chief executive officer
of CIBC, and now holds the position of chairman of its Executive Committee.
Mr. Fullerton is also a director of CIBC, Orange plc, Amoco Canada
Petroleum Co. Ltd., Ontario Hydro, Westcoast Energy Inc., George Weston Ltd.,
Coca-Cola Beverages Ltd., Hollinger Inc., Asia Satellite Telecommunications
Company Limited, and a member of the advisory board, IBM Canada Ltd., and other
cultural and medical entities.
8
<PAGE>
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James J. Howard
o Chairman of the Board,
President and Chief Executive
[PHOTO] Officer Northern States Power
Company
o Director since 1990
o Member of Executive, Personnel
and Nominating and Governance
(Chairman) Committees of the
Board
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Mr. Howard, age 61, graduated from the University of Pittsburgh, receiving a
bachelor's degree in 1957. He was awarded a Sloan Fellowship to the
Massachusetts Institute of Technology and received a master of science degree in
1970.
Mr. Howard was president and chief operating officer of Ameritech, the
Chicago- based parent of the Bell companies serving Illinois, Indiana, Michigan,
Ohio and Wisconsin, prior to joining Northern States Power Company, an electric
and gas utility company, as its president and chief executive officer in 1987.
Mr. Howard has served as its chairman of the board and chief executive officer
since 1988, and in 1994, was also named president.
Mr. Howard is also a director of Walgreen Company, Ecolab Inc., ReliaStar
Financial and the Federal Reserve Bank of Minneapolis. He also serves on the
board of overseers for the Carlson School of Management, University of
Minnesota, the Board of Trustees for the University of St. Thomas, in St. Paul,
Minnesota, and the Board of Visitors for the University of Pittsburgh, Joseph M.
Katz School of Business.
Mr. Howard is former chairman and a board member of the Edison Electric
Institute and current chairman of the Nuclear Energy Institute, both located in
Washington, DC.
Mr. Howard serves the community as a board member and past chairman
(1994-1995) of the United Way of Minneapolis Area; the Minnesota Business
Partnership; the Jerimiah Program; the Greater Minneapolis Convention & Visitors
Association; Capitol City Partnership; the Minneapolis Center for Corporate
Responsibility; and the Danny Thompson Memorial Leukemia Foundation.
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Bruce Karatz
o Chairman, President and
[PHOTO] Chief Executive Officer
Kaufman and Broad Home
Corporation
o Director since 1992
o Member of Audit and Personnel
Committees of the Board
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Mr. Karatz, age 51, is a graduate of Boston University, where he received a
bachelor's degree in history. He also earned a law degree from the University of
Southern California.
In 1972, Mr. Karatz joined the predecessor of Kaufman and Broad Home
Corporation, the largest home builder in the Western United States and one of
the largest residential builders in Paris, France, where he held a number of
corporate positions prior to being named president of Kaufman and Broad-France
in 1976. After returning to the United States, in 1980, he was elected president
of all housing operations. In 1986, he was elected president and chief executive
officer of Kaufman and Broad Home Corporation, and in 1993, was named chairman
of the board.
Mr. Karatz also is a director of Smith's Food & Drug Centers, Inc., and
National Golf Properties, Inc. Among his civic and cultural activities, Mr.
Karatz is a trustee of the RAND Corporation, co-chairman of the Mayor's Alliance
for a Safer L.A., and a member of the Board of the National Park Foundation,
University of Southern California Law Center Board of Councilors, and a member
of the Council on Foreign Relations. In 1992, he was inducted into the
California Building Industry Hall of Fame.
9
<PAGE>
- --------------------------------------------------------------------------------
A. Barry Rand
o Executive Vice President
[PHOTO] Xerox Corporation
o Director since 1990
o Member of Finance and
Personnel Committees of
the Board
- --------------------------------------------------------------------------------
Mr. Rand, age 52, is a graduate of the American University, receiving a
bachelor's degree in mar- keting. He also graduated from Stanford University's
graduate program, receiving master's degrees in both business administration and
management sciences. In addition, Mr. Rand has received a number of honorary
doctorate degrees.
Mr. Rand joined Xerox Corporation, a document processing office equipment
company, in 1968. In May 1985, he was elected a corporate officer and in 1987 he
was elected president of Xerox's United States Marketing Group. In February
1992, Mr. Rand was promoted to executive vice president and is responsible for
worldwide operations.
Mr. Rand is also a director of Abbott Laboratories and Ameritech
Corporation. He serves on the board of overseers of the Rochester Philharmonic
Orchestra and is a member of the Stanford University Graduate School of Business
advisory council. In 1993, Mr. Rand was inducted into the National Sales Hall of
Fame.
- --------------------------------------------------------------------------------
Steven G. Rothmeier
o Chairman of the Board and
Chief Executive Officer
[PHOTO] Great Northern Capital
o Director since 1985
o Member of Executive, Finance
(Chairman) and Audit Committees
of the Board
- --------------------------------------------------------------------------------
Mr. Rothmeier, age 50, is a graduate of the University of Notre Dame and
received a master's degree in business administration from the University of
Chicago.
In March 1993, Mr. Rothmeier formed Great Northern Capital, a private asset
management firm, and serves as its chairman of the board and chief executive
officer. Prior to March 1993, Mr. Rothmeier served as president at IAI Capital
Group, a venture capital and merchant banking firm. From 1973 to November 1989,
he held various senior positions at Northwest Airlines, Inc., and from 1986 to
1989, he served as chairman of the board and chief executive officer of NWA Inc.
and Northwest Airlines, Inc.
Mr. Rothmeier is also a director of Precision Castparts Corp., Department
56, Inc., E.W. Blanch Holdings, Inc., and the Argonne National
Laboratory/University of Chicago Development Corporation (ARCH). He also serves
as chairman of the St. Agnes Foundation in St. Paul, Minnesota, and of Catholic
Views Broadcast, Inc. Channel 53 Television in Minnesota.
Mr. Rothmeier is a member of the Council on the Graduate School of
Business, University of Chicago, a trustee of the University of Chicago, a
director of the American Council on Germany, a director of the Center of the
American Experiment, an advisor to the Metropolitan Economic Development
Association, and former vice chairman of the U.S. - China Business Council.
10
<PAGE>
- --------------------------------------------------------------------------------
Michael W. Wright
o Chairman of the Board,
[PHOTO] President and Chief Executive
Officer SUPERVALU INC.
o Director since 1987
Member of Executive, Finance
and Personnel (Chairman)
Committees of the Board
- --------------------------------------------------------------------------------
Mr. Wright, age 58, is a graduate of the University of Minnesota, receiving a
B.A. degree in 1961 and an LL.B. in 1963. He was admitted to the Minnesota Bar
in 1963.
Mr. Wright was a member of the law firm of Dorsey and Whitney from 1963 to
1977. In 1977, he joined SUPERVALU INC., a food distributor and retailer, as
senior vice president of administration and as a member of the board of
directors. He was elected president and chief operating officer in 1978, chief
executive officer in 1981, and chairman of the board in 1982.
Mr. Wright is also a director of Cargill, Inc., Musicland Stores
Corporation, Norwest Corporation and ShopKo Stores, Inc. He is a member of the
board of directors of the Food Marketing Institute, Food Distributors
International and the International Center for Companies of the Food and Trade
Industry (CIES).
================================================================================
ITEM 2--APPROVAL OF AUDITORS
- --------------------------------------------------------------------------------
The shares represented by your enclosed proxy will be voted (unless the proxy
indicates to the contrary) to approve the selection of Deloitte & Touche LLP,
independent public accountants, to examine the financial statements to be
included in the 1997 Annual Report to Shareholders.
A partner of Deloitte & Touche LLP will be present at the Meeting, will be
given the opportunity to make a statement, and will also respond to appropriate
questions.
The Board of Directors Recommends a Vote for Approval of the Selection of
Deloitte & Touche LLP as the Independent Public Accountants.
11
<PAGE>
================================================================================
ITEM 3--APPROVAL OF PROPOSED 1997 HONEYWELL STOCK AND INCENTIVE PLAN
- --------------------------------------------------------------------------------
The Board of Directors has adopted, subject to shareholder approval, the 1997
Honeywell Stock and Incentive Plan. The 1997 Plan will replace the 1993
Honeywell Stock and Incentive Plan, which shareholders approved in 1993. The
1997 Plan will terminate on April 15, 2002. The following are the principal
differences between the 1997 and the 1993 Plan:
o Since the SEC's Section 16 rules no longer restrict the transferability
of stock options, the 1997 Plan does not prohibit transferability of stock
options.
o In order to allow grants under the 1997 Plan to qualify as
"performance-based" compensation for purposes of 162(m) of the Internal Revenue
Code, the maximum number of shares that may be granted to an individual in any
one year is 500,000.
Purpose of the Plan
The 1997 Plan is intended to facilitate ownership and increase the interest
of key employees in the growth and performance of Honeywell and motivate them to
contribute to the Company's future success, thus enhancing the value of the
Company for the benefit of shareholders.
Summary of Key Features of the Plan
The following is a summary of the key features of the 1997 Plan. The full
text of the 1997 Plan is attached to this Proxy Statement as Exhibit A. Please
refer to Exhibit A for a more complete description of the terms of the 1997
Plan.
Eligible Participants
The Personnel Committee of the Board will be responsible for the
administration of the 1997 Plan. Approximately 300 key employees who are
expected to contribute to the success of the Company are eligible to be
participants. The Committee has the authority to select employees to whom awards
are given. In addition, the CEO may make awards, subject to ratification by the
Committee. However, all awards to Executive Officers must be approved in advance
by the Committee.
Maximum Number of Shares
Up to 7,500,000 shares of Honeywell common stock will be granted under the
1997 Plan. This number will be adjusted for changes in the Company's capital
structure, such as a stock split. Shares delivered under the plan may be in the
form of authorized and unissued shares or treasury shares. Types of Awards
The 1997 Plan permits the granting of the following types of awards:
o Stock options
o Stock appreciation rights
o Other Stock Based Awards. This includes other awards valued in whole or
in part by reference to, or otherwise based on, Honeywell stock or other
performance measures.
Stock Options
The Committee will determine the exercise or purchase price per share of
any stock option granted under the plan, but the exercise price may not be less
than 100% of the fair market value of the stock on the date of the grant.
Options granted may be either incentive stock options ("ISOs") or nonqualified
stock options. The Committee will fix the term of each option. Options will be
exercisable at such time or times as determined by the Committee, and will
expire no later than ten years from the date the option is granted. Options may
be exercised by paying the purchase price and applicable withholding taxes,
either in cash, or in stock of the Company, at the discretion of the Committee.
The Committee may provide that optionees who surrender shares of Common Stock in
payment of an option shall be granted a new nonqualified stock option covering a
number of shares equal to the number so surrendered.
Stock Appreciation Rights
The Committee is authorized to grant stock appreciation rights, which
entitle recipients to receive payments in cash, shares or a combination, of an
amount representing the appreciation in the market value of a specified number
of shares from the date of grant until the date of exercise.
Other Stock Based Awards
The Committee is also authorized to grant to participants, either alone or
in addition to other awards granted under the 1997 Plan, awards of stock and
other awards that are payable in cash, other securities of the Company or other
forms of property, as the Committee shall determine.
The Committee shall determine the employees to whom Other Stock Based
Awards are to be made, the times at which such awards are to be made, the number
12
<PAGE>
of shares to be granted under such awards and all other terms, restrictions and
conditions of such awards. The provisions of Other Stock Based Awards are not
required to be uniform with respect to all recipients. Stock granted as Other
Stock Based Awards may be issued for no cash consideration or for such
consideration as may be determined by the Committee.
Change in Control Provisions
In order to maintain the rights of participants in the event of change of
control (as defined on page __, the Plan provides for:
(1) the acceleration of any time periods relating to the exercise or
realization of an award;
\
(2) the purchase of an award by the Company, for an amount of cash equal to
the amount that would have been received by a participant had the award been
currently exercisable or payable;
(3) adjustments to any outstanding awards as the Committee deems
appropriate to reflect the change of control; or
(4) any outstanding award to be assumed, or new rights substituted
therefore, by the acquiring or surviving entity in a change of control. The
Committee may, in its discretion, include further provisions and limitations in
any award agreement as it deems equitable and in the best interests of the
Company.
Tax Consequences of the Plan
The grant of a stock option will not result in taxable income at the time
of the grant for the optionee or the Company. The optionee will have no taxable
income upon exercising an ISO (except that the alternative minimum tax may
apply), and the Company will receive no deduction when an ISO is exercised. Upon
exercising a nonqualified stock option, the optionee will recognize ordinary
income in the amount by which the fair market value exceeds the option price;
the Company will be entitled to a deduction for the same amount. The treatment
to an optionee of a disposition of shares acquired through the exercise of an
option is dependent upon the length of time the shares have been held and on
whether such shares were acquired by exercising an ISO or a nonqualified stock
option. Generally, there will be no tax consequence to the Company in connection
with the disposition of shares acquired under an option except that the Company
may be entitled to a deduction in the case of a disposition of shares acquired
upon exercise of an ISO before the applicable ISO holding periods have been
satisfied.
With respect to other awards granted under the 1997 Plan that are settled
either in cash or in stock or other property that is either transferable or not
subject to a substantial risk or forfeiture, the participant must recognize
ordinary income equal to the cash or fair market value of shares or other
property received; the Company will be entitled to a deduction for the same
amount. For awards that are settled in stock or other property that is
restricted as to the transferability and subject to substantial risk of
forfeiture, the participant must recognize ordinary income equal to the fair
market value of the shares or other property received at the first time the
shares or other property become transferable or not subject to substantial risk
of forfeiture, whichever occurs earlier; the Company will be entitled to a
deduction for the same amount.
Amendments
The Board and the Committee are authorized to amend the 1997 Plan, except
that shareholder approval is required for any amendment that would materially
increase the number of shares available under the 1997 Plan.
Future Grants and Awards
At present, the Committee does not have definitive plans for granting of
awards under the 1997 Plan. No determination has been made as to the number of
stock options, stock appreciation rights or Other Stock Based Awards to be
granted, or the number or identity of optionees or recipients of awards.
In February 1997, the Committee granted options to employees
under the 1993 Plan.
Stock Price Information
The closing price of the Company's Common Stock as reported on the New York
Stock Exchange Composite Transactions on February 27, 1997, was $ .
The Board of Directors Recommends a Vote For Approval of The 1997 Honeywell
Stock And Incentive Plan.
13
<PAGE>
================================================================================
ITEM 4--PROPOSED ELIMINATION OF ARTICLE XII OF BY-LAWS WHICH PROVIDES FOR A
MAXIMUM AMOUNT OF INCENTIVE COMPENSATION
- --------------------------------------------------------------------------------
In 1954, the Board of Directors adopted and shareholders approved Article XII of
the Company's By-laws. Article XII provides that incentive compensation may be
paid to officers, heads of departments and other executives and key employees
whose work most affects the Company's earnings only if:
(1) the total amount of incentive compensation paid to these designated
individuals does not exceed 3% of the Company's consolidated pre-tax earnings;
and
(2) the Company has paid a dividend of at least $.0625 per share during the
year for which the incentive compensation is to be paid. ($.0625 is the current
relevant amount as adjusted for all stock splits since 1954.)
The full text of Article XII is attached as Exhibit B.
For the reasons stated below, the Board of Directors recommends that the
Company's By-Laws be amended to delete Article XII.
o The provision of the By-law which relates to the payment of annual dividends
is no longer a meaningful measurement.
The minimum annual dividend requirement for the payment of incentive
compensation under Article XII is $.0625 per share (after adjusting for all
stock splits since 1954). In 1996, Honeywell paid an annual dividend of $1.06
per share.
o Recent changes to SEC and IRS rules and increased public scrutiny of
executive compensation appear to make Article XII superfluous.
When the By-Law was adopted in 1954, disclosure practices and public
scrutiny regarding executive compensation were not nearly as developed as in the
current environment. The SEC's proxy rules now require a detailed report on
executive compensation, including an explanation of the linkage of incentive
compensation to Company performance and shareholder return. Section 162(m) of
the Internal Revenue Code has established a $1 million cap on a company's tax
deduction for compensation, other than performance- based compensation, for the
five most highly compensated executive officers.
Partially in response to changes in the tax law, several of Honeywell's
compensation plans impose limits on compensation. Under the Honeywell Senior
Management Performance Incentive Plan, which shareholders approved in 1995,
annual incentive compensation for executives selected to participate in that
plan may be either (a) thirty-five percent of an incentive compensation pool,
consisting of one percent of income from continuing operations before income
taxes, or (b) a lesser amount based on the formula used under the Corporate
Executive Compensation Plan. The 1997 Stock and Incentive Plan, which
shareholders are being asked to approve this year, limits grants to an
individual in any one year to 500,000 shares.
Finally, commentators and investors closely monitor and comment on all
forms of executive compensation. We believe that the processes in place to
monitor executive compensation in 1997 make Article XII unnecessary.
o Article XII could potentially limit flexibility to design incentive
compensation programs in the future.
For 1996, the amount available under the By-Law for incentive payments to
the 35 designated executives was approximately $ million; the amount paid or
accrued was approximately $ million.
Honeywell has made a five-year projection of executive compensation under
a range of economic and performance assumptions, and believes that Article XII
will not impact incentive compensation under current compensation practices.
However, it is difficult to anticipate the compensation design that will best
motivate executives in the future. The Honeywell Board or the shareholders might
decide that a substantially greater part of compensation be performance-based
and at-risk with a corresponding reduction in salary. Article XII could limit
the flexibility of the Board in designing these or other motivational
compensation programs.
o The size and organization of Honeywell and our use of incentive compensation
have changed dramatically since 1954.
In 1954, Honeywell had annual revenue of $230 million; in 1996, revenues
exceeded $7 billion. In 1954, there were 15 executives who were covered by
14
<PAGE>
Article XII. In 1996, 35 executives were covered. Since 1954, the use of vice
president titles has expanded to a variety of division and staff functions, and
the use of incentive compensation has spread down several levels within the
Company in order to tie the compensation of a broad range of executives and
managers to the performance of Honeywell and its business units. The Personnel
Committee has had to interpret which executives receiving incentive compensation
met the "key employee" definition of Article XII within a changing and expanding
organization not envisioned by the original authors of the By-Law.
o Compensation theory and practice have changed substantially since 1954.
At the time the By-law was adopted in 1954, annual incentive compensation
based on a com-pany's financial results was not a mainstream practice. In 1997,
annual incentive compensation based on goals and objectives is common in most
corporations and is generally favored by shareholders and commentators.
Long-term incentive compensation - unknown in 1954 - is now favored by
compensation specialists. As explained in the Report on Executive Compensation
in this proxy statement, compensation for Honeywell executives is based on
meeting both short-term and long-term objectives. Although the plain language of
Article XII does not address long-term compensation, Honeywell includes in the
By-law calculation not only the amount of incentive compensation based on annual
goals and objectives, but also the annual accrual for compensation based on
multi-year goals that may be paid in later years. In that sense, Article XII
does not directly relate to Honeywell's current incentive compensation programs.
In summary, the Board of Directors strongly supports the philosophy that
compensation be structured to align the interests of management and shareholders
and that a substantial portion of compensation be performance-based. The Board
does not believe that the limitation contained in Article XII of the Honeywell
By-laws currently provides any meaningful support for these goals, and in fact
may conflict with these goals. Over time, monitoring compliance with the By-law
limitation has become a time-consuming exercise that is not relevant to
Honeywell's compensation goals and philosophy.
The Board of Directors recommends a vote FOR this proposal.
STOCK OWNERSHIP REPORTING
- --------------------------------------------------------------------------------
The rules of the Securities and Exchange Commission require that Honeywell
disclose late filings of reports of stock ownership (and changes in stock
ownership) by its directors and executive officers. To the best of the Company's
knowledge, there were no late filings during 1996.
STOCK OWNERSHIP GUIDELINES
- --------------------------------------------------------------------------------
Executives
o The Board of Directors adopted stock ownership guidelines for Honeywell
executives in 1990. In 1996, the Board raised these guidelines. The current
guidelines are as follows: The chief executive officer and chief operating
officer are expected to own Honeywell stock having a value of at least five
times the mid-point of the executive's salary grade range. The ownership
level for presidents of Honeywell business units and the chief financial
officer is four times the midpoint of the executive's salary grade range. The
guideline applicable to other executive officers is three times the midpoint
of salary grade range.
Board of Directors
o The Board of Directors has adopted a guideline that each director have an
ownership interest in Honeywell stock equal to at least six times the annual
retainer fee. As the annual retainer is currently $32,000, the guidelines
would encourage each director to have an equity interest in Honeywell of at
least $192,000.
15
<PAGE>
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
On February 28, 1997, the directors and executive officers of Honeywell
beneficially owned, in the aggregate, shares of Honeywell common stock (less
than one percent of the shares outstanding). In general, "beneficial ownership"
includes those shares a director or officer has the power to vote or transfer,
and stock options that are exercisable currently or within 60 days. Honeywell
directors and executive officers also have interests in stock-based units under
Company plans. While these units may not be voted or transferred, we have listed
them in the table below as they represent the total economic interest of the
directors and executive officers in Honeywell stock.
<TABLE>
<CAPTION>
Shares Options
Name of Beneficially Exercisable Stock
Beneficial Owner Owned Within 60 Days Units Total
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A. J. Baciocco, Jr. .................. (2)
E. E. Bailey ......................... (2)
M. R. Bonsignore ..................... (1) (3)
E. H. Clark, Jr. ..................... (2)
J. R. Dewane ......................... (1) (3)
W. H. Donaldson ...................... (2)
G. Ferrari ........................... (1) (3)
R. D. Fullerton ...................... (2)
E. D. Grayson ........................ (1) (3)
W.M. Hjerpe .......................... (1) (3)
J. J. Howard ......................... (2)
B. Karatz ............................ (2)
D. L. Moore .......................... (1) (3)
A. B. Rand ........................... (2)
S. G. Rothmeier ...................... (2)
M. W. Wright (2)
Directors and Executive Officers
as a group .........................
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the following shares of restricted stock previously awarded under
the Performance Share Program described on page ___ - ___: M. R.
Bonsignore- ; J. R. Dewane- ; G. Ferrari- ; E. D.
Grayson- ; W. M. Hjerpe- ; and D. L. Moore- .
(2) Represents stock units payable only in Honeywell stock that were awarded to
directors under the Non-Employee Directors Fee and Stock Unit Plan, which
is more fully described on page ___.
(3) Represents performance units that were awarded under the Performance Share
Program described on page ___ - ___.
16
<PAGE>
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
The following table shows compensation for services to Honeywell of the persons
who during 1996 were the chief executive officer and the other four most highly
compensated executive officers.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------
Annual Compensation Awards
-------------------------------- -------------------------
Other
Annual All Other
Name and Compen- Restricted Stock Options Compen-
Principal Position Year Salary ($) Bonus ($) sation ($) Awards ($) (1) (Shares) sation ($) (2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
M.R. Bonsignore 1996
Chairman of the Board 1995 682,917 541,616 31,714 -0- 113,131 17,682
and Chief 1994 624,375 391,858 45,311 -0- 60,000 15,274
Executive Officer
- ---------------------------------------------------------------------------------------------------------------
D.L. Moore 1996
President and Chief 1995 595,104 471,973 19,253 -0- 56,566 15,401
Operating Officer (3) 1994 567,188 355,967 51,140 -0- 30,000 14,160
- ---------------------------------------------------------------------------------------------------------------
J.R. Dewane 1996
President, Space 1995 279,802 210,806 4,934 -0- 27,475 6,656
and Aviation Control 1994 263,970 145,052 5,107 -0- 17,500 6,801
- ---------------------------------------------------------------------------------------------------------------
E.D. Grayson 1996
Vice President 1995 300,420 189,781 5,693 108,750 29,091 14,308
and General Counsel 1994 288,720 155,389 4,663 -0- 12,500 12,393
- ---------------------------------------------------------------------------------------------------------------
W.M. Hjerpe 1996
Vice President 1995
and Chief Financial Officer 1994
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As of December 31, 1996, the number and value of total shares of restricted
stock held by the above officers is: M.R. Bonsignore ( shares;
$ ); D.L. Moore ( shares; $ ); J.R. Dewane (
shares; $ ); E.D. Grayson ( shares; $ ); and W.M. Hjerpe
( shares; $ ). Dividends are paid on all restricted common
stock at the same rate as paid on Honeywell's common stock.
(2) Compensation reported represents (a) the value of Company contributions of
Honeywell stock to the Company 401(k) Plan, and (b) the value of premiums
paid by the Company on split-dollar life insurance. For 1996, the dollar
value of each benefit is: M.R. Bonsignore; (a) $ , (b) $ ; D.L.
Moore; (a) $ , (b) $ ; J.R. Dewane; (a) $ , (b) $ ; E.D.
Grayson; (a) $ , (b) $ ; and W.M. Hjerpe; (a) $ , (b) $ .
(3) D.L. Moore will be retiring as President and Chief Operating Officer on
April 15, 1997, and from the Company on June 30, 1997. G. Ferrari will
replace D.L. Moore as President and Chief Operating Officer on April 15,
1997.
17
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
Individual Grants (1) for Option Term (2)
- ---------------------------------------------------------------------- ----------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 0% ($) 5% ($) 10% ($)
- ---- ---- ---- ---- ---- ----- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
M.R. Bonsignore ........
D.L. Moore .............
J.R. Dewane ............
E.D. Grayson ...........
W.M. Hjerpe ............
- --------------------------------------------------------------------------------------------------------------------
All Shareholders (3) ...
All Optionees ..........
Optionee Gain as % of
All Shareholders' Gain .
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Stock options to optionees, including the above officers, become
exercisable one year after the grant date, and the option exercise price
may be paid in cash, shares or a combination. The options shown for above
officers are nonqualified stock options. Nonqualified stock options
currently are subject to a reload feature: when a nonqualified option is
exercised with the payment of the exercise price by delivery of
previously-owned shares of the Company's common stock, a reload option is
granted for the number of shares used to pay the exercise price, with a new
exercise price equal to the market value of the Company's common stock on
the date of exercise and a term expiring on the expiration date of the
original option.
(2) The dollar amounts under these columns are the result of calculations at 0%
and at the 5% and 10% rates set by the Securities and Exchange Commission
and therefore are not intended to forecast possible future appreciation, if
any, in the Company's stock price.
(3) For "All Shareholders" the gain is calculated from $52.19, the fair market
value of the Company's common stock on June 17, 1996, when stock options
were granted to employees who were not executive officers, and is measured
over the ten-year period ending June 17, 2006, when those stock options
expire.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at at
FY-End (#) FY-End ($)
Shares Acquired Value ------------------------- ---------------------------
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
M.R. Bonsignore ............
D.L. Moore .................
J.R. Dewane ................
E.D. Grayson ...............
W.M. Hjerpe ................
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
The table identifies performance units awarded under the Performance Share
Program, which is described in the Report on Executive Compensation on page __.
The executive officers have the opportunity to earn up to the Target/Maximum
amount of units, which will be payable in an equivalent amount of shares of
Honeywell common stock. The owners of performance units have no rights to vote,
receive dividends, or transfer the shares until issued. Payment will be based on
achieving the following objectives for the period from January 1, 1996 through
December 31, 1997: (a) cumulative pre-tax profit, (b) total shareholder return,
and (c) cumulative revenue.
The Target/Maximum amount represents a payout of 100 percent of performance
shares, if 100 percent, in each of the above objectives (a) and (c), is
achieved, and in the case of objective (b), first quartile performance is
achieved during the period. If results fall between 95 percent and 100 percent,
for each of objectives (a) and (c), then the payout of shares will be prorated.
The Threshold amount represents a payout of 50 percent of performance
shares, if 95 percent, in each of the objectives (a) and (c), of Honeywell's
financial goals is achieved during the period, and in the case of the objective
(b), second quartile performance is achieved.
For each of the three objectives, no payout of shares is permitted if the
above performance levels are not achieved.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Number of Performance or Estimated future payouts under
shares, units other period non-stock price-based plans
or other until maturation ----------------------------------------------
Name rights(#) or payout Threshold Target/Maximum
(#) (#)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
M. R. Bonsignore 2 years
D. L. Moore 2 years
J. R. Dewane 2 years
E. D. Grayson 2 years
W. M. Hjerpe 2 years
- --------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
Compensation Philosophy
The Personnel Committee of the Board of Directors has adopted a management
compensation program based on the following compensation principles:
o Honeywell provides the level of total compensation necessary to attract
and retain the best executives in its industries.
o Compensation is linked to performance and to the interests of
shareholders.
o Incentive compensation programs recognize both individual and team
performance.
o Compensation balances rewards for short- term vs. long-term results.
o Compensation programs include features that encourage executives to make
a long-term career commitment to Honeywell and its shareholders.
o Plans include measurements based on continuous growth and performance
relative to peer companies.
Compensation Methodology
Honeywell strives to provide a comprehensive executive compensation program that
is both innovative and competitive, in order to attract and retain superior
executive talent.
Each year the Personnel Committee reviews market data and assesses
Honeywell's competitive position in each component of executive compensation,
including base salary, annual incentive and long-term incentive compensation.
The primary market comparison for cash compensation (base salary and annual
incentive) is comprised of two broad-based surveys, each including several
hundred participating companies. The Committee believes that a broad mix of
companies is representative of the market in which Honeywell competes to recruit
executives. Target compensation is based on the median of actual compensation,
adjusted to reflect differences in revenue among these companies. Several
additional surveys are used to verify the results of the primary survey and to
allow for a broader analysis of trends in executive compensation.
The primary market comparison for long-term compensation is a bi-annual
survey of 40 high-tech manufacturing companies. This survey was selected because
of the technical competence of the survey firm and because the companies
operated in businesses similar to Honeywell's and compete for executives with
experience and skills similar to those Honeywell requires. Several additional
broad-based surveys were also consulted, for purposes of verifying the findings
of the primary survey and determining stock grant practices and trends.
The descriptions below of the components of compensation contain additional
detail regarding compensation methodology. Compensation decisions regarding
individual executives may also be based on factors such as individual
performance, level of responsibility or unique skills of the executive.
Components of Compensation
Base Salary
The Committee has established the Corporate Executive Compensation Plan, which
provides for annual cash compensation consisting of base salary and annual
incentive. The relationship between base salary and annual incentive is based on
salary grade. Executives at higher grade levels have a larger percentage of
their total cash compensation contingent on the accomplishment of business
objectives.
Annual base salary is designed to compensate executives for their sustained
performance. Salary is based on: (a) executive grade level; (b) individual
performance; and (c) spending guidelines approved by the Committee. The
Committee approves in advance all salary increases for executive officers.
Salaries for executive officers for 1996 were projected to be at the median of
the compensation peer group.
Annual Incentive
The Corporate Executive Compensation Plan establishes a fixed percentage of
annual salary as an executive's target "on-plan" annual incentive opportunity.
The Committee establishes the percentage based on comparative survey data on
annual incentive opportunity in the compensation peer group. For executive
officers, the percentage ranged from of salary to
of salary, in the case of the CEO. Annual incentive for 1996 was
targeted at the median of the compensation peer group.
Annual incentive is primarily based on meeting objectives using two
principal measurements -- net income and economic value added. In general,
economic value added measures return on investment over a specified period.
20
<PAGE>
The following is the formula used to determine annual incentive payments
for 1996:
o Fifty percent of the target on-plan incentive would be paid if the
Company achieved the 1996 net income objective approved by the Board of
Directors in Honeywell's 1995-97 long-range plan; and
o Fifty percent of the target on-plan incentive would be paid if the
Company achieved the 1996 economic value added objective as stated in
the 1995-97 long-range plan.
Participants receive no payment for an objective unless a minimum threshold
is achieved. Payments may range from zero to two hundred percent of the target
incentive, with payments increasing as results increase.
The Company exceeded the income and economic value added objectives for
1996. As a result, the average annual incentive approved by the Committee for
executive officers was percent. The Bonus Column of the Summary
Compensation Table on page ___ contains the annual incentive payment for 1996
for each of the most highly compensated executive officers.
Long Term Incentive Compensation
Stock Options
Based on annual and bi-annual market surveys of long-term incentive
compensation, the Committee approves a target number of option shares for each
executive grade level. Management makes recommendations to the Committee, as to
the number of options, if any, to be granted to an executive based on the
following criteria:
o the exective's ability to impact financial performance in terms of
profitability and revenue;
o the executive's past performance;
o expectations of the executive's future performance.
The Committee reviews and approves all stock options grants. Options, which
are granted by the Committee on a periodic basis, have an exercise price equal
to the fair market value of Honeywell common stock on the date of grant and are
typically exercisable one year from the date of grant. In 1995, the Committee
granted an increased number of options to executive officers and extended
vesting to eighteen months from one year, to reflect the Committee's decision to
defer the next scheduled grant of options for executive officers from July 1996
to February 1997.
Performance Share Program
The Performance Share Program provides grants of performance share
units with the number of shares granted varying by grade level. The Committee
selects the eligible participants and determines the amount of the grant to each
executive. Target grants are based on market surveys of long-term compensation
at compensation peer group companies.
The current measurement period for the program is two years (1996 and
1997). In early 1996, the Committee selected the eligible participants and
determined the target amount to be granted to each participant. The amount of
actual awards paid to participants depends on achieving various objectives.
The Committee established the following objectives for the 1996-1997
performance period:
Pre-Tax Profit. One third of the total grant is tied to Honeywell's pre-tax
profit objective for 1996-97 as approved by the Board of Directors in the
Company's 1996-98 long-range plan. If this objective is reached or exceeded at
the end of 1997, the target award for this objective (which is one-third of the
target for the entire plan) will be payable to the participant. If ninety-five
percent of this objective is reached, only half of the target amount for this
objective will be payable. If results fall between ninety-five and one hundred
percent, the grant will be pro-rated. If results fall below ninety-five percent,
no payment on this objective is permitted.
Total Shareholder Return. One third of the total grant is tied to
Honeywell's shareholder return (stock appreciation plus dividends) compared to a
group of selected peer companies. If Honeywell ranks in the top quartile, the
target amount for this objective will be payable to the participant. If
Honeywell ranks in the second quartile, only half of the target for this
objective will be payable. If Honeywell ranks in the third quartile, no payment
on this objective is permitted. For purposes of measuring the total shareholder
return objective, Honeywell constructed a group of 20 peer companies that
includes some, but not all, of the companies in the composite index for the
performance graph on page ___.
Cumulative Revenue. One third of the total grant is tied to Honeywell
achieving the cumulative revenue objective for 1996 and 1997 approved by the
21
<PAGE>
Board of Directors in the 1996-98 long-range plan. If the objective is reached
or exceeded, the target amount for this objective will be payable to the
participant. If ninety-five percent of the objective is reached, half of the
target amount for this objective will be payable. If results fall between
ninety-five to one hundred percent of the objective, the grant will be
pro-rated. If results fall below ninety-five percent, no payment on this
objective is permitted.
See the Long-Term Incentive table on page __ for awards to the most highly
compensated executive officers for 1996.
Prior to 1996, executive officers received grants of restricted stock in
lieu of the performance share units described above. The fixed restriction
period on these shares was typically nine years, but was accelerated if certain
performance objectives were met. Shares of restricted stock previously granted
to the most highly compensated executive officers are listed in footnote __ of
the Summary Compensation Table on page __.
Restricted Stock
The Committee occasionally grants shares of restricted stock with fixed
restriction periods to ensure the retention of key executives or as part of the
compensation to a new executive hired from outside the Company.
Chief Executive Officer
Michael R. Bonsignore became Chairman of the Board and Chief Executive
Officer at the 1993 Annual Meeting of Shareholders. The non-employee directors
meet annually, in private, to review Mr. Bonsignore's performance. The Personnel
Committee uses this performance evaluation in considering Mr. Bonsignore's
compensation.
Salary and Annual Incentive
In 1996, Mr. Bonsignore received a percent salary increase
months after his last increase.
In 1995, shareholders approved the Honeywell Senior Management
Performance Incentive Plan. Annual incentive compensation under that plan
for Mr. Bonsignore may be either (a) thirty-five percent of an incentive
compensation pool consisting of one percent of income from continuing
operations before income taxes, or (b) a lesser amount based on the formula
used under the Corporate Executive Compensation Plan.
For 1996, the Committee decided that Mr. Bonsignore's annual incentive
payment be based on the objectives established under the Corporate
Executive Compensation Plan described on page __. Based on the Company's
performance for 1996, Mr. Bonsignore received a payment of
representing of his target incentive.
Mr. Bonsignore's total annual compensation for 1996, including salary
and annual incentive, was below the median for his position, in both of the
primary and secondary surveys used to determine cash compensation.
Long-Term Incentive
Stock Options
Mr. Bonsignore did not receive a grant of stock options in 1996,
reflecting the Committee's decision in 1995 to defer his next grant of
options until February 1997. At the time he became CEO in 1993, Mr
Bonsignore received a special grant of 55,000 stock options which vest in
1998.
Performance Share Units and
Restricted Stock
For 1996, Mr. Bonsignore received units under the Performance
Share Program described on page_. In 1993, Mr. Bonsignore received a
special award of 30,000 shares of restricted stock which vest in 1998.
Applicable Tax Code Provision
The Committee has reviewed the potential consequences for the Company of Section
162(m) of the Internal Revenue Code, which imposes a limit on tax deductions for
annual compensation in excess of one million dollars paid to any of the five
most highly compensated executive officers. This provision had no impact on the
Company in 1996 and is currently expected to have little or no impact in 1997.
Employment Agreements
When Mr. Moore became President and Chief Operating Officer in 1993, he entered
into an employment agreement with the Company, which was amended in 1995. Under
22
<PAGE>
the terms of the agreement Mr. Moore received a grant of 55,000 stock options.
In addition, he will be entitled to receive 60 monthly payments of $34,000 (in
addition to his normal retirement benefit) when he retires from the Company. In
January 1997, Mr. Moore announced that he will retire on June 30, 1997.
When Mr. Dewane retired as an executive officer of the Company on December
31, 1996, he entered into an employment agreement with the Company. In general
the agreement provides for salary and fringe benefits through June 30, 1997, the
date on which he will retire as an employee. Mr. Dewane will also be entitled to
receive a grant of stock options in 1997.
Submitted by the Personnel Committee of the Board of Directors:
A. J. Baciocco, Jr.
J. J. Howard
B. E. Karatz
A. B. Rand
M. W. Wright, Chair
23
<PAGE>
PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The graph compares the cumulative total shareholder return on Honeywell's common
stock for the last five fiscal years with the cumulative total return of (1) the
S&P 500 Index and (2) a composite of the S&P Electrical Equipment Index and the
S&P Aerospace and Defense Index. The composite index is weighted two-thirds
Electrical Equipment and one-third Aerospace and Defense to reflect the
approximate division in the Company's revenue between (a) its Home and Building
Control and Industrial Control businesses and (b) its Space and Aviation Control
business.
The graph assumes the investment of $100 in Honeywell's common stock, the S&P
500 Index and the Composite Industry Index at the market close on December 31,
1991 and the reinvestment of all dividends.
CUMULATIVE TOTAL SHAREHOLDER RETURN
[The following table was depicted as a line graph in the printed material]
Honeywell
- --------------------------------------------------------------------------------
100 105 111 105 166 229
- --------------------------------------------------------------------------------
S&P 500
- --------------------------------------------------------------------------------
100 108 118 120 165 203
- --------------------------------------------------------------------------------
S&P EE/
S&P A & D
- --------------------------------------------------------------------------------
100 108 134 139 207 278
- --------------------------------------------------------------------------------
24
<PAGE>
CHANGE IN CONTROL AND TERMINATION ARRANGEMENTS
- --------------------------------------------------------------------------------
Compensation and Retirement Plans
Several of the Company's compensation and retirement plans provide for enhanced
employee benefits upon "a change in control" of the Company. A change of control
will generally be deemed to have occurred upon (1) a third party's acquisition
of thirty percent or more of the Company's stock, (2) a change in the majority
of the members of the Company's Board of Directors, (3) a merger, consolidation
or liquidation of the Company, or (4) a sale of all or substantially all of the
assets of the Company.
In general, upon a change in control, (1) all options become immediately
exercisable, (2) restricted shares become immediately vested, and (3)
performance-based awards are paid out.
The Company's qualified retirement plan contains provisions, which specify
how assets in excess of those needed to satisfy the plan's obligations are to be
directed. In general, those assets will be applied towards post-retiree medical
benefits to participants under age 65 and to payment of increased retirement
benefits on a proportional basis to both active and retired participants.
The Company's supplementary retirement plans generally provide for the
payment of retirement benefits in excess of those provided by the Company's
qualified retirement plans. Upon a change in control, participants' accrued
benefits under any of the plans become fully vested and are paid out in a lump
sum following termination of employment after the change in control.
Termination Agreements
The Company has entered into executive termination agreements with 23 of its
executives, including each of the most highly compensated executive officers.
These agreements will be automatically extended each January 1 unless the
Company notifies an executive by October 1 of the preceding year that it does
not wish to extend the term of the executive's agreement. If a change in control
occurs at any time during the term of an agreement, the term is automatically
extended for a period of thirty-six months, but not beyond the end of the month
in which the executive would reach age 65.
In general, these agreements entitle the executive to a lump sum payment of
three times (in some cases, two times) the executive's salary and on-plan
incentive bonus if either the executive's employment is terminated (other than
for cause) or his or her duties are diminished following a change in control.
The executive will also be entitled to medical, life insurance and disability
coverage for up to three years (in some cases, two years). In addition, the
Company will compensate the executive for any excise tax liability he or she may
incur as a result of payments made under the agreement.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
- -------------------------------------------------------------------------------------------------------------------
Average Compensation Years of Service
(Average of Salaries Plus Incentive Payments --------------------------------------------------------------------
During Highest 60 Consecutive Months of
120 Months Prior to Retirement) 15 20 25 30 35
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 100,000 $ 21,678 $ 28,904 $ 36,130 $ 43,356 $ 45,856
--------------------------------------------------------------------
300,000 69,678 92,904 116,130 139,356 146,856
--------------------------------------------------------------------
500,000 117,678 156,904 196,130 235,356 247,856
--------------------------------------------------------------------
700,000 165,678 220,904 276,130 331,356 348,856
--------------------------------------------------------------------
900,000 213,678 284,904 356,130 427,356 449,856
--------------------------------------------------------------------
1,100,000 261,678 348,904 436,130 523,356 550,856
--------------------------------------------------------------------
1.300,000 309,678 412,904 516,130 619,356 651,856
--------------------------------------------------------------------
1,500,000 357,678 476,904 596,130 715,356 752,856
--------------------------------------------------------------------
1,700,000 405,678 540,904 676,130 811,356 853,856
--------------------------------------------------------------------
1,900,000 453,678 604,904 756,130 907,356 954,856
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Honeywell and its subsidiaries maintain a variety of pension and retirement
plans for their employees. The table illustrates the annual benefits payable by
the Company in specified remuneration and years-of-service classifications at
normal retirement under the Retirement Benefit Plan, which is a defined benefit
plan that does not require employee contributions. Compensation used for pension
25
<PAGE>
formula purposes includes salary and annual bonus reported as set forth in the
table on page __. Contributions by Honeywell, when required by the Plan, are
determined on an actuarial basis and are not made primarily for the benefit of
any individual. The credited years of service for the officers in the table on
page __ are: M.R. Bonsignore -- 26 years; D.L. Moore -- 34 years; J.R. Dewane --
36 years; E.D. Grayson -- 4 years; and W.M. Hjerpe -- 22 years. A portion of the
benefits shown in the table may be paid from the Company's supplementary
retirement plans, rather than from plan trusts, due to limitations imposed by
the Internal Revenue Code, which restricts the amount of benefits payable under
tax-qualified plans.
================================================================================
OTHER INFORMATION
- --------------------------------------------------------------------------------
Director Nominations
The Nominating and Governance Committee of the Board of Directors will consider
qualified nominees for director recommended by shareholders. Recommendations
should be sent to: Secretary of the Company, Honeywell Inc., Honeywell Plaza,
Minneapolis, Minnesota 55408. Any nominations for director to be made at a
shareholder meeting must satisfy the requirements set forth in Honeywell's
By-laws. A copy of the relevant portion of the By-laws may be obtained upon
request from the Secretary of the Company at the address listed above.
Shareholder Proposals for 1997
An eligible shareholder who wants to have a qualified proposal considered
for inclusion in the proxy statement for the 1998 Annual Meeting of Shareholders
must notify the Secretary of the Company. The proposal must be received at the
Company's offices no later than November__, 1997. A shareholder must have been a
registered or beneficial owner of at least one percent of the Company's
outstanding common stock or stock with a market value of $1,000 for at least one
year prior to submitting the proposal, and the shareholder must continue to own
such stock through the date on which the Meeting is held.
Expenses of Solicitation
Honeywell pays the cost of preparing, assembling and mailing this
proxy-soliciting material. In addition to the use of the mail, proxies may be
solicited personally, by telephone or telegraph, or by Honeywell officers and
employees without additional compensation. Honeywell pays all costs of
solicitation, including certain expenses of brokers and nominees who mail proxy
material to their customers or principals. In addition, Georgeson & Company Inc.
has been retained to assist in the solicitation of proxies for the 1997 Annual
Meeting of Shareholders at a fee of approximately $18,000 plus associated costs
and expenses.
By Order of the Board of Directors,
Sigurd Ueland
Secretary
Dated March , 1997
See enclosed proxy card -- please sign and mail promptly.
- --------------------------------------------------------------------------------
26
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EXHIBIT A
================================================================================
1997 HONEYWELL STOCK AND INCENTIVE PLAN
- --------------------------------------------------------------------------------
Article 1. Purpose and Duration
1.1 Purpose. The purpose of the 1997 Honeywell Stock and Incentive Plan is to
further the growth, development and financial success of Honeywell and its
Subsidiaries by aligning the personal interests of key employees, throughout the
ownership of shares of the Honeywell common stock and through other incentives,
to those of its shareholders. The Plan is further intended to provide
flexibility to Honeywell in its ability to compensate key employees and to
motivate, attract and retain the services of those who have the ability to
contribute to the success of Honeywell and its Subsidiaries. The Plan also
provides for incentive awards to key employees of Affiliates in those cases
where the success of Honeywell or its Subsidiaries may be enhanced by the award
of incentives to such persons.
Stock Options, Stock Appreciation Rights and Other Stock Based Awards may be
granted under the Plan.
1.2 Duration. Upon approval by the Board of Directors of Honeywell, subject to
ratification by an affirmative vote of a majority of the Shares present and
entitled to vote at the annual meeting of shareholders of Honeywell to be held
on April 15, 1997, or at any adjournment thereof, the Plan, if so approved,
shall become effective April 16, 1997, and shall remain in effect, subject to
the right of the Board of Directors to terminate the Plan at any time pursuant
to Article 10 herein, until April 15, 2002 (the "Termination Date").
Article 2. Definitions
2.1 Definitions. Capitalized terms used throughout the Plan shall have the
meanings set forth below unless otherwise defined elsewhere in the Plan:
(a) Affiliate" means any corporation (other than a Subsidiary), partnership,
association, joint venture or other entity in which Honeywell or any
Subsidiary participates directly or indirectly in the decisions regarding
the management thereof or the production or marketing of products or
services.
(b) "Award" means, individually or collectively, the grant of a Stock Option,
Stock Appreciation Right or Other Stock Based Award under this Plan.
(c) "Award Agreement" means the document which evidences an Award and which
sets forth the terms, conditions and limitations relating to such Award.
(d) "Board of Directors" means the Board of Directors of Honeywell.
(e) "Change in Control" shall have the meaning set forth in Article 9 herein.
(f) "Change in Control Value" means the highest price paid for a Share by a
third party in connection with a Change in Control.
(g) "Code" means the Internal Revenue Code of 1986, as amended form time to
time, or any successor Code thereto.
(h) "Committee" means the group of individuals administering the Plan, which
shall be the Personnel Committee of the Board or any other committee of the
Board performing similar functions as appointed from time to time by the
Board.
(i) "Effective Date" means April 16, 1997.
(j) "Eligible Employee" means any executive, managerial, professional,
technical or administrative employee of Honeywell, any Subsidiary or any
Affiliate who is expected to contribute to its success.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor Act thereto.
A-1
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(l) "Fair Market Value" means, with respect to any particular date, the average
of the highest and lowest price of a Share as reported on the consolidated
tape for New York Stock Exchange listed securities (or other principal
reporting system, as determined by the Committee).
(m) "Incentive Stock Option" means a Stock Option, which is designated as an
Incentive Stock Option and is intended to meet the requirements of Section
422 of the Code.
(n) "Honeywell" means Honeywell Inc., a Delaware corporation.
(o) "Nonqualified Stock Option" means a Stock Option, which is not intended to
be an Incentive Stock Option.
(p) "Other Stock Based Award" means an Award, granted pursuant to Article 6
herein, other than a Stock Option or Stock Appreciation Right, that is paid
with, valued in whole or in part by reference to, or is otherwise based on
Shares.
(q) "Participant" means an Eligible Employee selected by the Committee to
receive an Award under the Plan.
(r) "Plan" means 1997 Honeywell Stock and Incentive Plan.
(s) "Shares" means the issued or unissued shares of the common stock, par value
$1.50 per share, of Honeywell.
(t) "Stock Appreciation Right" means the grant, under Article 6 herein, of a
right to receive a payment from Honeywell, in the form of Shares, cash or a
combination of both, equal to the difference between the Fair Market Value
of one or more Shares and the exercise price of such Shares under the terms
of such grant.
(u) "Stock Option" means the grant, under Article 6 herein, of a right to
purchase a specified number of Shares during a specified period at a
designated price, which may be an Incentive Stock Option or a Nonqualified
Stock Option.
(v) "Subsidiary" means a corporation as defined in Section 425(f) of the Code
with Honeywell being treated as the employer corporation for purposes of
this definition.
(w) "Termination Date" means the earlier of: the date on which all Shares
subject to the Plan have been purchased or acquired according to the Plan's
provisions, the date the Plan is terminated pursuant to Article 10, or
April 15, 2002.
(x) "Withholding Event" means an event related to an Award which results in the
Participant being subject to taxation at the federal, state, local or
foreign level.
Article 3. Administration
3.1 Authority. The Committee shall administer the Plan and shall have full and
exclusive power, except as limited by law or by the Restated Certificate of
Incorportion or By-laws of Honeywell, and subject to the provisions herein, to:
(a) select Eligible Employees to whom Awards are granted;
(b) determine the size and types of Awards and the terms and conditions thereof
in a manner consistent with the plan;
(c) determine whether, to what extent and under what circumstances, Awards may
be: settled, paid or exercised in cash, Shares, other Awards, or other
property; or canceled, forfeited or suspended;
(d) construe and interpret the Plan and any agreement or instrument entered
into under the Plan;
(e) amend (subject to the provisions of Section 4.4 and Article 10 herein) the
terms and conditions, other than price, of any outstanding Award to the
extent such terms and conditions are within its discretion; and
A-2
<PAGE>
(f) establish, amend or waive rules and regulations for the Plan's
administration and make all other determinations which may be necessary or
advisable for the administration of the Plan; provided, however, that the
Board of Directors may from time to time assume, in its sole discretion,
administration of the Plan.
All Awards shall be made by the Committee, provided however, that Awards may be
made by the Chief Executive Officer of Honeywell, or a designee approved by the
Committee other than during the normal period for granting Awards, subject to
ratification by the Committee or satisfaction of a six-month holding period
following the date of grant.
3.2 Decisions Binding. All determinations and decisions made by the Committee
related to the Plan, and all related orders or resolutions of the Board of
Directors shall be final, conclusive and binding on all persons, including
Honeywell, its Subsidiaries and Affiliates, its shareholders, Participants, and
their estates and beneficiaries.
Article 4. Shares Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in Section 4.2 herein,
no more than 7,500,000 Shares may be issued under the Plan, of which a maximum
of fifty percent (50%) of such Shares may be issued pursuant to Other Stock
Based Awards. These Shares may consist in whole or in part, of authorized and
unissued Shares, or of treasury Shares. No fractional Shares shall be issued
under the Plan; however, cash may be paid in lieu of any fractional Shares in
settlement of Awards under the Plan.
4.2 Adjustments. For purposes of determining the number of Shares available for
issuance under the Plan:
(a) The grant of an Award shall reduce the authorized pool of Shares by the
number of Shares subject to such Award while such Award is outstanding. If
any Award granted under the Plan is canceled, terminates, expires or lapses
for any reason, any Shares subject to such Award shall be credited to the
authorized pool of Shares and again be available for the grant of an Award
under the Plan; except, however, to the extent that such Award was granted
in tandem with another Award, any Shares issued pursuant to the exercise or
settlement of such other Award shall not be credited back.
(b) Any Shares tendered, either actually or by attestation, in payment of the
price of a Stock Option or stock option exercised under any other Honeywell
plan shall be credited to the authorized pool of Shares.
(c) To the extent that any Shares covered by Stock Appreciation Rights are not
issued upon the exercise of such Stock Appreciation Rights, the authorized
pool of Shares shall be credited for such number of Shares.
(d) To the extent that an Award is settled in cash or any form other than
Shares, the authorized pool of Shares shall be credited with the
appropriate number of Shares represented by such settlement of the Award,
as determined at the sole discretion of the Committee.
(e) If Shares are used to pay dividends and dividend equivalents in conjunction
with outstanding Awards, an equivalent number of Shares shall be deducted
from the Shares available for issuance.
(f) Subject to Article 9 herein, in the event of any merger, reorganization,
consolidation, recapitalization, separation, spin-off, liquidation, stock
dividend, split-up, Share combination or other change in the corporate or
capital structure of Honeywell affecting the Shares, such adjustment shall
be made in the number and class of Shares which may be delivered under the
Plan, and in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to
prevent dilution or enlargement of rights; provided that the number of
Shares subject to any Award shall always be a whole number.
4.3 Effect of Acquisition. Any Awards granted by Honeywell in substitution for
awards or rights issued by a company whose shares or assets are acquired by
Honeywell or a Subsidiary shall not reduce the number of Shares available for
grant under the Plan.
A-3
<PAGE>
Article 5. Participation
5.1 Selection of Participants. The Committee may, from time to time, select from
all Eligible Employees, those to whom Awards shall be granted and shall
determine the nature and amount of each Award. Nothing herein shall confer upon
any Eligible Employee, the right to receive an Award under the Plan, or, if
selected to receive an Award, the right to continue to receive same. Further, no
Participant shall have any right, by reason of the grant of any Award under the
Plan, to continued employment by Honeywell to any Subsidiary or Affiliate. There
is no obligation for uniformity of treatment of Participants under the Plan.
5.2 Award Agreement. All Awards shall be evidenced by an Award Agreement unless
otherwise specified by the Committee. The Award Agreement shall specify such
terms, conditions, limitations, and other provisions applicable to the Award as
determined by the Committee.
Article 6. Awards
Awards may be granted as Stock Options, Stock Appreciation Rights or Other Stock
Based Awards, and except as otherwise provided for in Section 3.1 herein, may be
granted by the Committee to Eligible Employees at any time, and from time to
time as the Committee shall determine. The Committee shall have complete
discretion in determining the number of Awards to grant (subject to the Share
limitations set forth in Section 4.1 and 6.1 herein) and, consistent with the
provisions of the Plan, the terms, conditions and limitations pertaining to such
Awards. No Participant may be granted Stock Options of Stock Appreciation Rights
representing in the aggregate, more than 500,000 Shares, in any given year.
No Award may by granted on or after the Termination Date, but Awards made prior
to the Termination Date may be exercised, vested or otherwise effectuated beyond
that date unless otherwise limited.
6.1 Stock Options. Stock Options may be granted at an exercise price which shall
not be less than one hundred percent (100%) of the Fair Market Value of a Share
on the date the Stock Option is granted.
A Stock Option may be exercised at such times and subject to such conditions as
may be specified in an Award Agreement in whole or in installments, which may be
cumulative and shall expire at such time as the Committee shall determine at the
time of grant; provided that no Stock Option shall be exercisable later than ten
(10) years after the date it is granted. Prior to the exercise of a Stock
Option, the holder thereof shall not have any rights of a shareholder with
respect to any of the Shares covered by the Stock Option.
A Stock Option shall be exercised by the delivery of a written notice of
exercise to the Director of Executive Compensation of Honeywell or such other
person specified by the Committee, setting forth the number of Shares with
respect to which the Stock Option is to be exercised, accompanied by full
payment of the total Stock Option price and any required withholding taxes.
Payment shall be made either (a) in cash or equivalent, (b) by tendering, either
actually or by attestation, previously acquired Shares having a Fair Market
Value at the time of exercise equal to the total price of the Stock Option, or
(c) by a combination of (a) and (b). The Committee also may allow exercises to
be made with the delivery of payment as permitted under Federal Reserve Board
Regulation T, subject to applicable securities law restrictions, or by any other
means which the Committee determines to be consistent with the Plan's purpose
and applicable law. The Committee may provide that the exercise of a Stock
Option, by a tendering previously acquired shares, will entitle the exercising
Participant to receive another Stock Option covering the same number of shares
tendered and with a price of no less than the Fair Market Value on the date of
grant of such other option.
6.2 Stock Appreciation Rights. Stock Appreciation Rights may be granted at an
exercise price which shall be less than one hundred percent (100%) of the Fair
Market Value of a Share on the date the Stock Appreciation Right is granted, in
tandem with a Stock Option, such that the exercise of the right to exercise the
related Stock Option for an equivalent number of shares, or independently of any
Stock Option.
A Stock Appreciation Right may be exercised at such times as may be specified in
an Award Agreement, in whole or in installments, which may be cumulative and
shall expire at such time as the Committee shall determine at the time of grant;
provided that no Stock Appreciation Right shall be exercisable later than ten
(10) years after the date it is granted.
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Stock Appreciation Rights shall be exercised by the delivery of a written notice
of exercise to the Director of Executive Compensation of Honeywell or such other
person specified by the Committee, setting forth the number of Shares with
respect to which the Stock Appreciation Right is to be exercised.
6.3 Other Stock Based Awards. Other Stock Based Awards may be granted to such
Eligible Employees as the Committee may select, at any time and from time to
time as the Committee shall determine, in payment of amounts earned under other
incentive compensation plans of Honeywell, in satisfaction of performance goals
or for other consideration. The Committee shall have complete discretion in
determining the number of Shares subject to such Awards (consistent with the
Share limitations set forth in Section 4.1 herein), the consideration for such
Awards and the terms, conditions and limitations pertaining to same including,
without limitation, restrictions based upon the achievement of performance
goals, and/or restrictions under applicable federal or state securities laws,
and conditions under which same will lapse. Performance goals may include
individual performance by the Committee or Honeywell's achievement goals
established by the Committee based on certain business criteria such as cash
flow, debt to equity ratio, earnings per share, economic value added, net
income, operating ratio, return on assets, return on equity, return on
investment, revenue, shareholder return and working capital. The terms,
restrictions and conditions of the Award need not be the same with respect to
each Participant.
The Committee may, in its sole discretion, direct Honeywell to issue Shares
subject to such restrictive legends and/or stop transfer instructions as the
Committee deems appropriate.
Article 7. Dividends and Dividend Equivalents
The Committee may provide that Awards earn dividends or dividend equivalents.
Such dividend equivalents may be paid currently or may be credited to an account
established by the Committee under the Plan in the name of the Participant. In
addition, dividends or dividend equivalents paid on outstanding Awards or issued
Shares may be credited to such account rather than paid currently. Any crediting
of dividends or dividend equivalents may be subject to such restrictions and
conditions as the Committee may establish, including reinvestment in additional
Shares or Share equivalents.
Article 8. Deferrals and Settlements
Payment of Awards may be in the form of cash, Shares, other Awards, or in such
combinations thereof as the Committee shall determine at the time of grant, and
with such restrictions as it may impose. Payment may be made in a lump sum or in
installments as prescribed by the Committee. The Committee may also require or
permit Participants to elect to defer the issuance of Shares or the settlement
of Awards in cash under such rules and procedures as it may establish under the
Plan. It may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts or the payment or crediting of
dividend equivalents on deferred settlements denominated in Shares.
The Committee may provide that Shares may be utilized to pay all or any part of
the purchase price of the exercise of any Stock option or option to acquire
Shares under any other Honeywell incentive compensation plan, if permitted under
such plan.
Article 9. Change in Control
9.1 Definition. For purposes of this Section 9.1, a Change in Control of
Honeywell shall be deemed to have occurred if the conditions set forth in any
one or more of the following paragraphs shall have been satisfied:
(a) Any "person", as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than Honeywell, any subsidiary of Honeywell, any
"person" (as hereinabove defined) acting on behalf of Honeywell as
underwriter pursuant to an offering who is temporarily holding securities
in connection with such offering, any trustee, or other fiduciary holding
securities under an employee benefit plan of Honeywell or any corporation
owned, directly or indirectly, by the shareholders of Honeywell in
substantially the same proportions as their ownership of stock of
Honeywell), is or becomes the "beneficial owner" (as defined in Rule 13d-3
A-5
<PAGE>
under the Exchange Act), directly or indirectly, of securities of Honeywell
representing thirty percent (30%) or more of the combined voting power of
Honeywell's then outstanding securities; or
(b) During any period of not more than two consecutive years (not including any
period prior to the Effective Date of the Plan), individuals who at the
beginning of such period constitute the Board of Directors, and any new
director (other than a director designated by a person who has entered into
an agreement with Honeywell to effect a transaction described in paragraphs
(a), (c) or (d) of this Section 9.1) whose election by the Board of
Directors or nomination for election by Honeywell's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof;
(c) The shareholders of Honeywell approve a merger or consolidation of
Honeywell with any other person, other than (i) a merger or consolidation
which would result in the voting securities of Honeywell outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the combined voting power of the
voting securities of Honeywell or such surviving entity outstanding
immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of Honeywell (or
similar transaction) in which no "person" (as hereinabove defined) acquires
more than thirty percent (30%) of the combined voting power of Honeywell's
then outstanding securities; or
(d) The shareholders of Honeywell approve a plan of complete liquidation of
Honeywell or an agreement for the sale or disposition by Honeywell of all
or substantially all of Honeywell's assets (or any transaction having a
similar effect).
9.2 Effect. In the event of a Change in Control of Honeywell, then, as of the
first date that the Change in Control has been deemed to have occurred, (i) any
Stock Options not previously exercisable and vested shall become fully
exercisable and vested, (ii) restrictions, if any, applicable to Other Stock
Based Awards shall lapse and the Shares subject thereto shall become fully
vested, and (iii) Other Stock Based Awards shall be paid as described in Section
9.3.
9.3 Payment Upon Change in Control. Notwithstanding any other provision of the
Plan, a Participant shall receive, with respect to each performance period for
any Other Stock Based Award in progress at the time of the Change in Control, a
lump sum cash amount, within five days after the Change in Control, equal to the
"Change in Control Value" of the Other Stock Based Awards the Participant would
have earned if 100% of the relevant performance goals were met, multiplied by a
fraction, the numerator of which is the number of months (rounded to the nearest
whole month) of actual service in the relevant performance period and the
denominator being the number of months in the relevant performance period.
Article 10. Amendment, Modification and Termination
10.1 Amendment, Modification, and Termination. Subject to the approval of the
Board of Directors, the Committee may terminate, amend or modify the Plan at any
time and from time to time, without shareholder approval, except to the extent
required by applicable law. The termination, amendment or modification of the
Plan may be in response to changes in the Code, the Exchange Act, national
securities exchange regulations or for other reasons deemed appropriate by the
Committee. However, without the approval of the shareholders of Honeywell, no
amendment or modification shall (i) materially increase the total amount of
Shares which may be issued under the Plan, except as provided in Sections 4.2(f)
and 4.3 herein, (ii) increase the limitation set forth in Article 6 or the
number of Stock Options or Stock Appreciation Rights that may be granted to any
individual, or (iii) change the minimum Stock Option and Stock Appreciation
Right exercise prices set forth in Sections 6.1 and 6.2 herein.
10.2 Awards Previously Granted. No termination, amendment or modification of the
Plan shall in any manner adversely affect any Award previously granted under the
Plan, without the written consent of the Participant.
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<PAGE>
Article 11. Withholding
11.1 Tax Withholding. Honeywell shall have the power and the right to deduct or
withhold, or require a Participant or any person to whom an Award may be
transferred, if permitted by the Committee, to remit to Honeywell, an amount in
cash or Shares having a Fair Market Value sufficient to satisfy federal, state
and local taxes (including any FICA obligation) required by law to be withheld
with respect to any Withholding Event which occurs because of a grant of an
Award or exercise or payment made thereunder, or as a result of the Plan.
11.2 Share Withholding. Upon a Withholding Event, the Committee may require one
or more classes of Participants or any persons to whom an Award may be
transferred, if permitted by the Committee, to satisfy the withholding
requirement, in whole or in part, by having Honeywell withhold Shares having a
Fair Market Value, on the date the tax is to be determined, equal to the amount
of withholding (federal, FICA. state or local) which is required by law. Absent
such a mandate, the Committee may allow Participants or such persons to elect
Share withholding for tax purposes subject to such terms and conditions as the
Committee shall establish.
Article 12. Indemnification
12.1 Indemnification. Each person who is or shall have been a member of the
Committee, or of the Board of Directors, shall be indemnified and held harmless
by Honeywell from and against any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit or proceeding to which such person may be
a party or in which such person may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
such person in settlement thereof with Honeywell's approval, or paid by such
person in satisfaction of any judgment in any such action, suit or proceeding
against such person, provided such person shall give Honeywell an opportunity,
at its own expense, to handle and defend the same before such person undertakes
to handle and defend it on such person's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under Honeywell's Restated Certificate of
Incorporation or By-laws, as a matter of law, or otherwise, or any power that
Honeywell may have to indemnify them or hold them harmless.
Article 13. Unfunded Plan
13.1 Unfunded Plan. The Plan shall be unfunded and Honeywell shall not be
required to segregate any assets that may at any time be represented by Awards
under the Plan. Any liability of Honeywell to any person with respect to any
Award under the Plan shall be based solely upon any contractual obligations that
may be effected pursuant to the Plan. No such obligation of Honeywell shall be
deemed to be secured by any pledge of, or other encumbrance on, any property or
assets of Honeywell.
Article 14. Successors
14.1 Successors. All obligations of Honeywell under the Plan, with respect to
any Awards granted hereunder, shall be binding on any successor to Honeywell,
whether the existence of such successor is the result of a direct or indirect
purchase, merger consolidation or otherwise, of all or substantially all of the
business and/or assets of Honeywell.
Article 15. Requirements of Law
15.1 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required. Further, each Award shall be subject to the
requirement that, if at any time the Committee shall determine, in its sole
discretion, that the listing, registration or qualification of any Shares
available for Awards or any Awards upon any securities exchange or under any
state or federal law, or the consent or approval of any government regulatory
body, is necessary or desirable as a condition of, or in connection with, the
A-7
<PAGE>
issuance of Shares pursuant to an Award, or the granting of such Award or the
grant or settlement thereof, such Award may not be exercised or settled in whole
or in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
15.2 Severabililty. In the event any provision of the Plan shall be held illegal
or invalid for any reason, such illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
15.3 Governing Law. To the extent not preempted by federal law, the Plan and all
Award Agreements, shall be construed in accordance with and governed by the laws
of the State of Minnesota.
A-8
<PAGE>
EXHIBIT B
================================================================================
HONEYWELL BY-LAWS
- --------------------------------------------------------------------------------
ARTICLE XII.
INCENTIVE COMPENSATION PAYMENTS
As an incentive to efficient and profitable management, there is hereby
authorized to be set aside for payment, for any fiscal year, beginning with the
year 1954, as additional compensation to officers, heads of departments and
other executives and key employees of the Corporation and its subsidiaries whose
work most affects the Corporation's earnings, amounts which, in the aggregate,
shall not exceed 3% of the consolidated net income during such year of the
Corporation and its subsidiaries, before deducting Federal or state taxes based
on income and before any provision for such additional compensation, provided
that no such additional compensation shall be paid for any year unless cash
dividends shall be paid in that year on the Common Stock of the Corporation at
the rate of at least $2 per share as constituted at January 1, 1954. Such
consolidated net income shall exclude, to the extent that the Committee
hereinafter mentioned shall in its discretion deem proper, the whole or any part
of any item of unusual or non-recurring income or loss not arising in or the
ordinary course of business. Such aggregate amounts of additional compensation
for any fiscal year shall be in addition to deferred portions of additional
compensation authorized for a prior year or years. Subject to the foregoing
limitations (which shall not be changed without the approval of the holders of a
majority of the outstanding stock of the Corporation having general voting
power), the total amount of additional compensation, if any, that may be
authorized for any year, the participants in such additional compensation, the
apportionment thereof among such participants and the time or times of payment
thereof shall be determined by a Committee of the Board of Directors consisting
of not less than three nor more than five of those Directors who are not
entitled to share in the payments or who shall have advised the Board of
Directors in writing that they irrevocably have elected not to participate in
the payments, as the Chairman of the Board of Directors shall appoint to such
Committee from time to time. Said Committee, which shall act by a majority of
its members, shall be authorized to determine that any award to any participant
for any year shall be paid at one time or to direct the payment of all or any
part thereof in such deferred installments over a period of not exceeding ten
consecutive years commencing not later than the tenth year following the year
for which the award was made, the payment of any such deferred installments to
be subject to such conditions, if any, with respect to the continued employment
of the participant, his refraining from competing with the Corporation or
otherwise, as the Committee shall determine. Said Committee shall also be
authorized to determine that any payment to be made to any participant in any
year shall be made in cash or partly in cash and partly in Common Stock of the
Corporation purchased in the open market for that purpose, in such proportions
as the Committee shall determine, such stock being valued for such purpose at
the mean price thereof on the New York Stock Exchange on such date as the
Committee shall determine. The total amount authorized under this Article for
any year shall be reported to the stockholders at or before the annual meeting
of stockholders following such year. The provisions of this Article shall not be
deemed to preclude such forms of incentive compensation for other employees of
the Corporation as shall be authorized from time to time by the Board of
Directors.
B-1
<PAGE>
Honeywell
- --------------------------------------------------------------------------------
Helping You Control Your World
Honeywell Inc.
Honeywell Plaza
Minneapolis, Minnesota 55408
Recycled Paper with a Minimum
of 10% Post Consumer Waste
PRINTED IN U.S.A.
<PAGE>
HONEYWELL INC.
PROXY
Proxy Solicited on Behalf of The Board of Directors
for Annual Meeting of Shareholders
on April 15, 1997
The undersigned hereby appoints M.R. Bonsignore, E.D. Grayson and S.
Ueland, and each of them, proxies (each with power of substitution) of the
undersigned to attend the above annual meeting of shareholders of Honeywell Inc.
and any adjournment thereof and thereat to vote all shares of stock held by the
undersigned, including any shares that may be held for the undersigned's account
under the Automatic Dividend Reinvestment Plan for Honeywell Common Shares
administered by ChaseMellon Shareholder Services, L.L.C., as specified on the
reverse side, and on any other matters that may properly come before the
meeting.
For those participants who may hold shares in the Honeywell Savings and
Stock Ownership Plan (HSSOP), please fill in and sign this card and mail it in
time to be received no later than April 10, 1997, in order to be voted in a
timely manner by the Trustee, T. Rowe Price Trust Company. After April 10, 1997,
the instructions cannot be revoked and, in accordance with the Plans, you may
not vote these shares in person at the meeting. The Trustee is authorized to
vote the Plan shares for which instructions have been given upon such other
business as may come before the meeting. ChaseMellon Shareholder Services,
L.L.C. will tally the vote on behalf of the Trustee.
THIS PROXY CARD IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
- --------------------------------------------------------------------------------
Comments:
- --------------------------------------------------------------------------------
------------
SEE REVERSE
SIDE
------------
WRIGLEY CONFERENCE CENTER
HONEYWELL
ANNUAL MEETING
The Meeting will be held in the ,
commencing at 2:00 p.m. Coffee will be served
before the Meeting beginning at 1:00 p.m.
LOCATION--
From I-17
o Exit Glendale Ave.
o Proceed East to 24th St.
o Right at 24th St. to
Arizona Biltmore Circle.
o Left on Arizona Biltmore Circle
Watch for small sign on right side of road.
o Turn right and proceed into
parking areas.
From HWY 51
o Exit Highland Ave.
o Proceed East on Highland Ave.
o Left at 24th St.
o Proceed North on 24th St. to
Arizona Biltmore Circle.
o Right on Arizona Biltmore Circle
Watch for small sign on right side of road.
o Turn right and proceed into
parking areas.
From I-10 [MAP OF DIRECTIONS TO THE
o Exit HWY 51 North. WRIGLEY CONVENTION CENTER]
o Proceed North on HWY 51.
o Exit Highland Ave.
o Follow same directions as From HWY 51.
From Scottsdale Road
o Turn West on Lincoln Drive.
o Proceed West on Lincoln Drive to 24th St.
o Left on 24th St.
o Proceed South on 24th St. to
Arizona Biltmore Circle.
0 Left on Arizona Biltmore Circle
Watch for small sign on right side of road.
o Turn right and proceed into
parking areas.
<PAGE>
<TABLE>
<CAPTION>
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR.
<S> <C>
1. Election of Directors TO WITHHOLD 2. Approval of the selection FOR AGAINST ABSTAIN
FOR all nominees AUTHORITY (For all of Deloitte & Touche LLP ---- ---- ----
(Except as marked Nominees listed) as auditors.
to the contrary*) ---- ---- ----
---- ---- 3. Approval of 1997 FOR AGAINST ABSTAIN
Honeywell Stock & ---- ---- ----
---- ---- Incentive Plan.
---- ---- ----
4. Approval of Elimination of FOR AGAINST ABSTAIN
Article XII of Honeywell ---- ---- ----
By-law.
---- ---- ----
This proxy will be voted FOR items
1-4 if no choice is specified.
Discontinue ----
Annual Report
----
----
Will attend meeting
----
Nominees:
A.J. Baciocco, Jr., E.E. Bailey, M.R. Bonsignore, I have noted comments
W.H. Donaldson, G. Ferrari, R.D. Fullerton, on reverse side
J.J. Howard, B. Karatz, A.B. Rand,
S.G. Rothmeier, M.W. Wright Change of Address
* INSTRUCTION: ____________________________________
To withhold authority to vote
for any individual nominee, strike ____________________________________
a line through the nominee's name above.
Signature(s)________________________________________________ Date _________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
</TABLE>
FOLD AND DETACH HERE
RETURN PROXY CARD IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND DATING
Admission Ticket
HONEYWELL INC.
1997 Annual Meeting of Shareholders
Tuesday, April 15, 1997
2:00 P.M.
The Wrigley Conference Center
2501 East Telawa Trail
Phoenix, Arizona
Coffee will be served before the meeting beginning at 1:00 p.m.
PLEASE ADMIT NON-TRANSFERABLE
