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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
HONEYWELL INC.
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(Name of Registrant as Specified in Its Charter)
HONEYWELL INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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HONEYWELL LOGO
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March , 1999
To our Shareowners:
You are cordially invited to attend the Annual Meeting of Shareowners,
which will be held at 2:00 p.m., Tuesday, April 20, 1999, at the Minneapolis
Convention Center, 1301 Second Avenue South, Minneapolis, Minnesota.
- You will find a Notice of Meeting on Page 1 that identifies three proposals
for your action.
- At the meeting we will present a brief report on Honeywell's 1998 business
results and outlook for the future.
- If you plan to attend the meeting, please detach the admission ticket on
your proxy card to present at the meeting registration tables.
- Refreshments will be served beginning at 1:00 p.m.
YOUR VOTE IS IMPORTANT. We encourage you to read this Proxy Statement and
vote your shares as soon as possible. A return envelope for your proxy card is
enclosed for convenience. Shareowners of record also have the option of voting
via the Internet or by telephone. Instructions to vote either via the Internet
or by telephone are included on the proxy card.
Sincerely,
Michael R. Bonsignore
Michael R. Bonsignore
Chairman of the Board and
Chief Executive Officer
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PROXY STATEMENT
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
NOTICE OF MEETING........................................... 1
VOTING PROCEDURES........................................... 2
HONEYWELL BOARD PRACTICES................................... 4
DIRECTOR COMPENSATION....................................... 7
BOARD MEETINGS--COMMITTEES OF THE BOARD..................... 7
ITEM 1--ELECTION OF DIRECTORS............................... 10
Nominees........................................ 10
ITEM 2--RATIFICATION OF INDEPENDENT AUDITORS................ 15
ITEM 3-- APPROVAL OF PROPOSED AMENDMENT TO RESTATED
CERTIFICATE OF INCORPORATION........................ 15
STOCK OWNERSHIP INFORMATION................................. 15
Compliance with Section 16(a) Reporting......... 15
Stock Ownership Guidelines...................... 16
Five Percent Owner of Honeywell Stock........... 16
Stock Ownership of Director Nominees and
Executive Officers.............................. 17
EXECUTIVE COMPENSATION...................................... 18
Summary Compensation Table...................... 18
1998 Option Grants Table........................ 19
1998 Option Exercises and Year-End Values
Table........................................... 19
Long-Term Incentive Plan--Awards Table.......... 20
Report on Executive Compensation................ 20
Insider Participation and Director
Interlocks.................................... 23
Performance Graph............................... 25
Change in Control and Termination
Arrangements.................................... 26
Pension Plan Table.............................. 27
OTHER INFORMATION........................................... 27
Director Nominations and Shareowner
Proposals..................................... 27
Expenses of Solicitation..................... 28
</TABLE>
YOUR VOTE IS IMPORTANT
If you are a shareowner of record, you can now vote your shares via the
Internet or by telephone by following the instructions on your proxy card. If
voting by mail, please complete, date and sign your proxy card and return it as
soon as possible in the enclosed envelope.
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HONEYWELL LOGO
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HONEYWELL INC., HONEYWELL PLAZA, MINNEAPOLIS, MINNESOTA 55408
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DATE: Tuesday, April 20, 1999
TIME: 2:00 p.m., Central Time
PLACE: Minneapolis Convention Center
1301 Second Avenue South
Minneapolis, Minnesota
RECORD DATE: February 19, 1999
MEETING AGENDA
1) Election of directors;
2) Ratification of appointment of auditors;
3) Approval of amendment to Honeywell's Restated Certificate of
Incorporation, to increase the number of authorized shares of common
stock the Company is authorized to issue; and any other matter properly
brought before the meeting.
SHAREOWNER LIST
A list of shareowners 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 shareowner for
any legally valid purpose.
ADMISSION TO THE MEETING
Admission to the meeting will be limited to Honeywell shareowners 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.
By Order of the Board of Directors,
Kathleen M. Gibson
Kathleen M. Gibson
Vice President and Corporate Secretary
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PROXY STATEMENT--VOTING PROCEDURES
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YOUR VOTE IS VERY IMPORTANT
Whether or not you plan to attend our Annual Meeting of Shareowners, please
take the time to vote your shares as soon as possible. Your prompt voting via
the Internet, telephone, or mail may save Honeywell the expense of a second
mailing.
METHODS OF VOTING
All shareowners may vote by mail. SHAREOWNERS OF RECORD CAN ALSO VOTE VIA
THE INTERNET OR BY TELEPHONE. Shareowners who hold their shares through a bank
or broker, can vote via the Internet or by telephone if these options are
offered by the bank or broker.
- - VOTING VIA THE INTERNET. Shareowners of record may vote via the Internet as
instructed on the proxy card. Internet voting is also available to shareowners
who hold their shares in the Honeywell Savings and Stock Ownership Plan,
Honeywell Employee Stock Purchase Plan and the Dividend Reinvestment Plan. The
Internet voting procedure is designed to verify shareowners through the use of
a Control Number that is provided on each proxy card. You will be able to vote
your shares via the Internet and confirm that your vote has been properly
recorded. Please see your proxy card for specific instructions.
- - VOTING BY TELEPHONE. Shareowners of record may vote by using the toll-free
number listed on the proxy card. Telephone voting is also available to
shareowners who hold their shares in the Honeywell Savings and Stock Ownership
Plan, Honeywell Employee Stock Purchase Plan and the Dividend Reinvestment
Plan. The telephone voting procedure is designed to verify shareowners through
use of a Control Number that is provided on each proxy card. The procedure
allows you to vote your shares and to confirm that your instructions have been
properly recorded. Please see your proxy card for specific instructions.
- - VOTING BY MAIL. Shareowners may sign, date and mail their proxies in the
postage-paid envelope provided. 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
Whether you vote by mail, telephone or via the Internet, you may later
revoke your proxy by:
- - sending a written statement to that effect to the Vice President and Corporate
Secretary of the Company;
- - submitting a properly signed proxy with a later date;
- - voting by telephone or via the Internet at a later time; or
- - voting in person at the annual meeting (except for shares held in the savings
plan described below).
VOTING BY SAVINGS PLAN PARTICIPANTS
If you own Honeywell shares as a participant in the Honeywell Savings and
Stock Ownership Plan, 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 or properly
voted via the Internet or by telephone will serve as voting instructions to T.
Rowe Price Trust Company, the trustee for the plan.
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Under the terms of the plan, voting instructions must be received by T.
Rowe Price by April 15. Please refer to your proxy card for a more detailed
explanation of the timing requirement for voting plan shares via the Internet,
by telephone or by mail.
VOTING BY STOCK PURCHASE PLAN PARTICIPANTS
If you own Honeywell shares as a participant in the Honeywell Employee
Stock Purchase Plan, you will receive a single proxy card that covers both
shares credited to your plan account, shares you may own as a participant in the
Savings Plan described above, if applicable, and shares you own of record that
are registered in the exact same name. If your plan account is not registered in
the same name as either your Savings Plan shares described above or your shares
of record, you will receive separate proxy cards for your record and holdings in
the plans. Proxies executed by plan participants or properly voted by telephone
or via the Internet will be voted in accordance with your instructions to First
Chicago Trust Company of New York, the custodian for the plan.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
At the close of business on the record date, February 19, 1999, there were
shares of Honeywell common stock outstanding and entitled to vote at the
annual meeting.
The following is an explanation of the vote required and method of counting
votes for each of the three items to be voted on at the annual meeting.
ITEM 1 - ELECTION OF DIRECTORS
The twelve nominees receiving the highest number of votes will be elected.
Shareowners who do not wish their shares to be voted for a particular nominee
may so indicate in the space provided on the proxy card or withhold authority as
prompted during telephone voting or instructed via the Internet.
ITEM 2 - RATIFICATION OF AUDITORS
The affirmative vote of a majority of shares present in person or by proxy
is required for approval of Item 2. Shares represented by proxy, which are
marked "abstain", will have the effect of a vote against Item 2. 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 3 - APPROVAL OF PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
The affirmative vote of a majority of the outstanding shares of Honeywell
common stock is required for approval of Item 3. Therefore, any shares that are
not voted, including shares represented by proxy which are marked "abstain" and
any "broker non-votes," will have the effect of a vote against Item 3.
OTHER BUSINESS
The Board knows of no other matters to be presented for shareowner 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 shareowner votes confidential.
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HONEYWELL BOARD PRACTICES
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In order to help our shareowners understand Honeywell's Board practices, we
are including below a description of current practices. 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 1999, the Board approved the following practices and
recommended that these practices be communicated to shareowners in this proxy
statement.
The Board is proud of its long-standing commitment to sound governance
practices, and was honored to be named one of the five best Boards by Chief
Executive magazine in 1997.
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 regularly to the full Board 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, the
Nominating and Governance 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 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,
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international background, etc. The principal qualification for a director is the
ability to act on behalf of all of the shareowners. The Board currently has 12
members, two of whom are employees of the Company.
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 70, or (2) 15 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.
DIRECTOR COMPENSATION AND STOCK OWNERSHIP
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. Under
the Board's stock ownership guidelines for Directors, each Director is expected
to own Honeywell stock having a value at least equal to six times the amount of
the Board's annual retainer.
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
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
chairperson 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-
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employee directors meet without the chairman and chief executive officer
present, the chairperson of the Board committee most relevant to the subject
under discussion will act as the chairperson of the meeting. Board members also
meet privately in executive sessions with the CEO to discuss matters of current
interest and long-term significance.
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. Chairpersons and members of these four committees are rotated
periodically, as appropriate. 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.
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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 shareowners 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 $40,000;
2) a fee of $1,200 for each board or Committee meeting attended ($1,800 for
a Committee chairperson); 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% 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. Stock units are payable in Honeywell stock at
the time a director leaves the Board. The plan also provides a director with the
option of deferring fees that would be otherwise payable in cash.
BOARD MEETINGS--COMMITTEES OF THE BOARD
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The Board of Directors held eight regular meetings during 1998. 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. Committee membership as of the record date is
listed below.
AUDIT COMMITTEE
The members of the Audit Committee are:
- R. Donald Fullerton (Chairperson)
- Albert J. Baciocco, Jr.
- Katherine M. Hudson
- Jaime Chico Pardo
- Bruce E. Karatz
The Audit Committee met three times in 1998. The primary functions of the Audit
Committee are to:
- - Establish and review the activities of the independent auditors and the
internal auditors;
- - Review and approve the format of the financial statements to be included in
the annual report to the shareowners;
- - Review recommendations of the independent auditors and responses of
management;
- - Review and discuss Honeywell financial reporting, loss exposures and asset
control with the auditors and management;
- - Monitor the Honeywell program for compliance with law and policies on business
ethics; and
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- - Direct and supervise any special investigations the Committee deems necessary.
FINANCE COMMITTEE
The members of the Finance Committee are:
- Elizabeth E. Bailey (Chairperson)
- Donald Fullerton
- A. Barry Rand
- Steven G. Rothmeier
- Michael W. Wright
The Finance Committee met four times in 1998. 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:
- - The financial constraints within which the Company will operate, such as
debt-equity ratio, coverage of fixed charges, and other financial ratios;
- - Proposed acquisitions, divestitures and other investments that exceed a
certain financial threshold;
- - Company debt and credit arrangements;
- - Proposals for obtaining additional capital funds or other changes in the
capitalization of the Company;
- - Dividend and tax policy;
- - Foreign exchange exposure and risks;
- - The Company's various retirement and pension plans; and
- - Investment banker relationships and investor relations.
NOMINATING AND GOVERNANCE COMMITTEE
The members of the Nominating and Governance Committee are:
- James J. Howard (Chairperson)
- Elizabeth E. Bailey
- Katherine M. Hudson
- Jaime Chico Pardo
- Steven G. Rothmeier
The Nominating and Governance Committee met three times in 1998. The primary
functions of the Nominating and Governance Committee are to:
- - Determine and recommend to the Board criteria regarding personal
qualifications currently needed for Board membership;
- - Determine and recommend to the Board appropriate compensation for directors;
- - 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;
- - Establish the process for the Board to evaluate the chief executive officer
and other inside directors;
- - Evaluate and recommend to the Board successors to the chief executive officer
and inside director positions when required;
- - Annually evaluate Board practices at Honeywell and other well-managed
companies and recommend appropriate changes to the Board; and
- - Consider governance issues raised by shareowners or other stakeholders in the
Company and recommend appropriate responses to the Board.
PERSONNEL COMMITTEE
The members of the Personnel Committee are:
- A. Barry Rand (Chairperson)
- Albert J. Baciocco, Jr.
- James J. Howard
- Bruce E. Karatz
- Michael W. Wright
The Personnel Committee met five times in 1998. The primary functions of the
Personnel Committee are to:
- - Review and report to the Board on the Company's programs for attracting,
retaining and promoting executives, and for developing future senior
management;
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- - Review and make recommendations to the Board regarding compensation for the
chief executive officer and other inside directors;
- - Review and approve performance targets, participation and level of awards for
incentive award plans; and
- - 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 1998
was 94%.
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ITEM 1--ELECTION OF DIRECTORS
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NOMINEES
Twelve directors of the Company are to be elected to serve until the 2000
Annual Meeting of Shareowners or until their successors are elected and
qualified. All of the nominees are currently directors of the Company and were
elected directors at the 1998 Annual Meeting of Shareowners, except Jamie Chico
Pardo, who was elected by the Board of Directors on September 15, 1998.
Your shares will be voted, unless authority to vote is withheld, 'FOR' the
election of the twelve nominees named below. 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.
[PHOTO]
STANDING FROM LEFT: Michael W. Wright, James J. Howard, Bruce Karatz, Albert J.
Baciocco, Jaime Chico Pardo, and Katherine M. Hudson.
SEATED FROM LEFT: Steven G. Rothmeier, Elizabeth E. Bailey, Michael R.
Bonsignore (Chairman), A. Barry Rand, Giannantonio Ferrari, and R. Donald
Fullerton.
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ALBERT J. BACIOCCO, JR. Director since 1988. Vice Admiral, U.S. Navy (Retired),
President, The Baciocco Group, Inc. since 1987.
After a distinguished 34-year career in the U.S. Navy, primarily within the
nuclear submarine force and directing the Department of the Navy research and
technology development enterprise, Admiral Baciocco has been engaged in a
variety of business and pro bono activities with industry, government and
academe, principally related to technology planning, investment, management and
implementation.
Admiral Baciocco is a director of American Superconductor Corporation and
Shell Exploration and Production Company. He is a member of the Naval Studies
Board of the National Research Council; a Trustee of the South Carolina Research
Authority; and serves on the boards of directors of the University of South
Carolina Research Institute, the Foundation for Research Development at the
Medical University of South Carolina, the Institute for Ocean and Systems
Engineering at Florida Atlantic University, and the Waste Policy Institute at
Virginia Polytechnic Institute and State University. He is a member of the
Council at the Virginia Institute of Marine Science of the College of William
and Mary, and currently serves as Chair of the Maritime Technical Advisory
Committee to the Thomas Jefferson National Accelerator Laboratory. In addition,
he is a member of the National Advisory Council of the Navy League of the United
States. Board Committees: Audit and Personnel. Age 68.
ELIZABETH E. BAILEY. Director since 1985. John C. Hower Professor of Public
Policy and Management, The Wharton School, University of Pennsylvania, since
1991.
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.
Dr. Bailey is also a director of Philip Morris Companies Inc., CSX
Corporation and the College Retirement Equities Fund. She serves on the board of
the Brookings Institution, Bancroft Neurohealth, and the National Bureau of
Economics Research. Board Committees: Finance (Chairperson) and Nominating and
Governance. Age 60.
MICHAEL R. BONSIGNORE. Director since 1990. Chairman of the Board and Chief
Executive Officer of Honeywell since April 1993.
Mr. Bonsignore began his business career at Honeywell in 1969. He held
various marketing and operations management positions and became Vice President
of Marine Systems in 1981. In 1983, Mr. Bonsignore was appointed President of
Honeywell Europe, based in Brussels, Belgium. In 1987, Mr. Bonsignore returned
to Minneapolis as 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 the International and
Home & Building Control businesses, and was also elected to the Company's Board
of Directors.
Mr. Bonsignore is also a director of Cargill, Inc., The St. Paul Companies,
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Inc., and Medtronic, 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, U.S. -
Russia Trade and Economic Council, the Alliance to Save Energy Board, New
Perspective Fund, Inc., and the Euro Pacific Growth Fund. He is a member of the
Executive Committee of the Honeywell Board. Age 57.
JAIME CHICO PARDO. Director since September 1998. Chief Executive Officer,
Telefonos de Mexico, S.A. de C.V. (TELMEX), a telecommunications company based
in Mexico City, since January 1995.
From 1993 to 1995, Mr. Chico Pardo was president and chief executive
officer of Grupo Condumex, S.A. de C.V., a manufacturer of products for the
construction, automobile and telecommunications industries. Prior to 1993, Mr.
Chico Pardo was President and Chief Executive Officer of Euzkadi/General Tire de
Mexico, a manufacturer of automotive and truck tires.
Mr. Chico Pardo is also a director of Carso Global Telecom, Grupo Carso and
Grupo Financiero Inbursa. He is also a member of the advisory council of the
Harvard Business School Initiative on Global Corporate Governance and a member
on the board of the Children's Interactive Museum in Mexico City. Board
Committees: Nominating and Governance and Audit. Age 49.
GIANNANTONIO FERRARI. Director since April 1997. President and Chief Operating
Officer of Honeywell since April 1997.
Mr. Ferrari joined Honeywell Italia in 1965. He held various managerial
positions in Italy, and in 1976 was appointed Director of Finance and Human
Resources for the Middle East region. In 1981, he was appointed Controller and
Director of Distribution for Honeywell Europe and, in 1984, he was elected Vice
President of Finance and 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, Middle East and Africa.
Mr. Ferrari is also a director of Northern States Power Company, the
National Association of Manufacturers, and a member of the Board of Governors of
the National Electrical Manufacturers Association. He is a member of the
Executive Committee of the Honeywell Board. Age 59.
R. DONALD FULLERTON. Director since 1992. Chairman--Executive Committee CIBC, a
Canadian financial services institution, since 1992.
Mr. Fullerton joined the Canadian Bank of Commerce (now CIBC) in 1953. From
1968 to 1974, he held various senior managerial positions with CIBC. He 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 the
company's chairman and chief executive officer.
Mr. Fullerton is also a director of CIBC, Orange plc, Westcoast Energy
Inc., George Weston Ltd., Hollinger Inc., Asia Satellite Telecommunications
Company Limited, and a member of the advisory board, IBM Canada Ltd., and other
cultural and medical entities. Board Committees: Audit (Chairperson) and
Finance. Age 67.
JAMES J. HOWARD. Director since 1990. Chairman of the Board, President and Chief
Executive Officer of Northern States Power Company, a Minnesota-based
12
<PAGE> 16
energy company. Chairman and Chief Executive Officer since 1988, and President
since 1994. Prior to 1987, Mr. Howard was president and chief operating officer
of Ameritech Corporation.
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 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; and he is a member of the International Energy Coal Industry Advisory
Board in Paris, France. Mr. Howard is also past chairman and board member of the
Edison Electric Institute and the Nuclear Energy Institute, both located in
Washington, DC.
Mr. Howard serves the community as a board member of the Minnesota Business
Partnership; the Capitol City Partnership; the Jerimiah Program; the
Metropolitan Economic Development Association; the Minneapolis Center for
Corporate Responsibility; and the Danny Thompson Memorial Leukemia Foundation.
He is also a member of the KARE Eleven Who Care Board of Governors and a Senior
Member of the Conference Board, Inc., in New York City; and is past chairman of
the United Way of Minneapolis. Board Committees: Nominating and Governance
(Chairperson), Executive and Personnel. Age 63.
KATHERINE M. HUDSON. Director since April 1998. President and Chief Executive
Officer, Brady Corporation, an international manufacturer of industrial
identification, safety, graphics and precision tape products based in Milwaukee,
Wisconsin.
Prior to joining Brady in 1994, Ms. Hudson served from 1970 until 1994 in
various managerial and financial positions with Eastman Kodak Company, and was
most recently the Corporate Vice President and General Manager for the
Professional Printing and Publishing Imaging Division.
Ms. Hudson is also a director of Brady Corporation and Case Corporation.
She serves on the Alverno College Board of Trustees and the Medical College of
Wisconsin Board of Trustees, the Advisory Council for the Indiana University
School of Business, the Advisory Board of the University of Wisconsin School of
Business, and the Governor's Commission on the Glass Ceiling. Board Committees:
Nominating and Governance and Audit. Age 52.
BRUCE KARATZ. Director since 1992. Chairman of the Board, President and Chief
Executive Officer, Kaufman and Broad Home Corporation, an international
residential and commercial builder based in California, since 1993. President
and Chief Executive Officer of the company since 1986.
Mr. Karatz is also a director of Fred Meyer, 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., member of the Board of the National Park Foundation, University of
Southern California Law Center Board of Councilors, member of the Board of
Governors for the Music Center of Los Angeles County, and a member of the
Council on Foreign Relations. In 1992, he was inducted into the California
Building Industry Hall of Fame. Board Committees: Audit and Personnel. Age 53.
A. BARRY RAND. Director since 1990. Former Executive Vice President, Worldwide
Operations, Xerox Corporation. Mr. Rand joined Xerox Corporation, a document
processing office equipment company, in
13
<PAGE> 17
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 1992, he was
elected to Executive Vice President, Worldwide Operations and held that office
until December 31, 1998.
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. Board Committees: Personnel (Chairperson) and Finance. Age 54.
STEVEN G. ROTHMEIER. Director since 1985. Chairman of the Board and Chief
Executive Officer, Great Northern Capital, a private asset management firm that
he formed in March 1993.
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 Waste Management, Inc., 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. 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, a director of the German Marshall Fund and an advisor to
the Metropolitan Economic Development Association. Board Committees: Executive,
Finance, and Nominating and Governance. Age 52.
MICHAEL W. WRIGHT. Director since 1987. Chairman of the Board, President
and Chief Executive Officer, SUPERVALU INC., a major food distributor and
retailer, since 1982. He was elected president and chief operating officer in
1978, chief executive officer in 1981, and chairman of the board in 1982. He
joined the company as senior vice president of administration and as a member of
the board of directors in 1977. Prior to 1977, he was a partner in the law firm
of Dorsey & Whitney.
Mr. Wright is also a director of Cargill, Inc., Musicland Stores
Corporation, and Wells Fargo and Company. He is chairman of the board of the
Food Marketing Institute, and a director of Food Distributors International,
Independent Grocers Alliance and CIES, The Food Business Forum.
Mr. Wright serves the community as trustee emeritus of the University of
Minnesota Foundation, trustee of St. Thomas Academy and is a member of the board
of overseers for the Carlson School of Management, University of Minnesota.
Board Committees: Executive, Personnel and Finance. Age 60.
14
<PAGE> 18
ITEM 2--RATIFICATION OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The shares represented by your proxy will be voted (unless you indicate to
the contrary) to ratify the selection of Deloitte & Touche LLP, independent
public accountants, to examine the financial statements to be included in the
1999 Annual Report to Shareowners.
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.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 2.
ITEM 3--APPROVAL OF PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
- --------------------------------------------------------------------------------
Article Fourth of Honeywell's Restated Certificate of Incorporation
currently fixes our authorized capital stock at 250,000,000 shares of common
stock and 25,000,000 shares of preference stock. The Board is recommending an
amendment to increase the number of authorized shares of common stock to
[ ]. No change is being proposed to the number of authorized shares
of preference stock.
The rights of additional authorized shares would be identical to shares now
authorized. Although the authorization would not, in itself, have any effect on
your rights as a shareowner, issuance of additional shares of common stock for
other than a stock split or dividend could have a dilutive effect on earnings
per share. If approved, the amendment would allow the Board to authorize the
issuance of additional shares up to the new maximum without further shareowner
approval, unless that approval is required under applicable law or stock
exchange regulations. This proposal is not in response to any known effort to
accumulate Honeywell common stock or to obtain control of Honeywell.
As of December 31, 1998, we had 250,000,000 shares of authorized common
stock, of which 187,536,597 shares were issued and outstanding, including
61,206,715 shares held in the Company's treasury. In addition, there were
12,405,731 shares reserved for issuance under various Company stock plans. While
we do not have any current plans to issue additional shares of common stock,
other than under previously authorized benefit and compensation plans, the
amendment would enhance the Board's flexibility in possible future actions, such
as stock splits, stock dividends, acquisitions, and other corporate activities
involving the common stock.
The proposed amendment requires the affirmative vote of a majority of the
outstanding shares. Therefore, failure to vote will have the same effect as a
vote against the amendment.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
STOCK OWNERSHIP INFORMATION
- --------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A) REPORTING
- --------------------------------------------------------------------------------
The rules of the Securities and Exchange Commission require that Honeywell
disclose late filings of reports of stock ownership (and changes in
15
<PAGE> 19
stock ownership) by its directors and
executive officers. To the best of the Company's knowledge, all of the filings
for the Company's executive officers and directors were made on a timely basis
in 1998.
STOCK OWNERSHIP GUIDELINES
- --------------------------------------------------------------------------------
EXECUTIVES
- - The Board of Directors adopted stock ownership guidelines for Honeywell
executives in 1990. The guidelines were raised in 1996. 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 for
other executive officers is three times the midpoint of salary grade range.
BOARD OF DIRECTORS
- -The Board of Directors 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 $40,000, the guidelines would
encourage each director to have an equity interest in Honeywell of at least
$240,000. Rather than setting a time frame for reaching the recommended
ownership guideline, the Board decided that Directors should use their judgment
in setting their own timetable for reaching the guideline.
FIVE PERCENT OWNER OF HONEYWELL STOCK
- --------------------------------------------------------------------------------
Barrow, Hanley, Mewhinney & Strauss, Inc., One McKinney Plaza, 3232
McKinney Avenue, 15th Floor, Dallas, Texas 75204-2429, notified Honeywell that
it beneficially owned 11,800,190 shares of Honeywell common stock on December
31, 1998. This represented 9.4% of Honeywell's outstanding shares on that date.
Barrow Hanley also advised Honeywell that it is a registered investment adviser
and that these shares are held on behalf of various clients.
16
<PAGE> 20
STOCK OWNERSHIP OF DIRECTOR NOMINEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
In general, "beneficial ownership" includes those shares a director or
executive officer has the power to vote or transfer, and stock options that are
exercisable currently or within 60 days. On February , 1999, the nominees for
directors and the executive officers of Honeywell beneficially owned, in the
aggregate, shares of Honeywell common stock (approximately 1. %
of the shares outstanding). 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> <C>
A.J. Baciocco, Jr. ........ 2,292 -0- 13,628 15,920
E.E. Bailey................ 2,082 -0- 17,011 19,093
M.R. Bonsignore............ 117,179 495,142 36,000 648,321
J.Chico Pardo.............. -0- -0- 447 447
G.Ferrari.................. 48,472 103,999 18,000 170,471
R.D. Fullerton............. 7,960 -0- 2,896 10,856
J.K. Gilligan.............. 31,073 45,734 1,807 78,614
W.M. Hjerpe................ 44,330 99,951 10,000 154,281
J.J. Howard................ 2,540 -0- 12,698 15,238
K.M. Hudson................ 500 -0- 510 1,010
B.Karatz................... 3,409 -0- 7,609 11,018
A.B. Rand.................. 1,015 -0- 5,688 6,703
S.G. Rothmeier............. 1,128 -0- 8,729 9,857
D.K. Schwanz............... 31,462 75,538 9,838 116,838
M.W. Wright................ 1,200 -0- 16,555 17,755
Directors and Executive
Officers as a group...... 436,726 1,252,296 197,877 1,886,899
- ------------------------------------------------------------------------------------------------------
</TABLE>
[TO BE UPDATED THROUGH 2-28-99]
17
<PAGE> 21
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
For 1998, the following table shows compensation for services to Honeywell
of the following persons: 1) the chief executive officer; and 2) the four most
highly compensated executive officers (other than the CEO) who were employed by
Honeywell during 1998.
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------------------- ---------------------- ----------
Other
Annual Restricted All Other
Name and Compen- Stock(1) Options LTIP Compen-
Principal Position Year Salary($) Bonus($) sation($) Awards($) (Shares) Payouts($) sation(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
M.R. Bonsignore 1998 959,712 1,068,654 17,449 1,571,250 237,367 -0- 46,891
Chairman of the Board 1997 882,308 1,115,410 21,906 -0- 85,000 1,764,692 43,655
and Chief 1996 747,310 820,000 3,815 -0- -0- -0- 44,276
Executive Officer
- -----------------------------------------------------------------------------------------------------------------------------------
G. Ferrari 1998 587,556 558,788 78,045(6) -0- 42,500 -0- -0-
President and Chief 1997 536,854 542,278 127,572(6) 350,000 49,379 712,342 -0-
Operating Officer (3)
- -----------------------------------------------------------------------------------------------------------------------------------
J.K. Gilligan 1998 316,810 330,317(5) 16,227 347,969 15,120 -0- 18,685
President, Solutions and 1997 271,661 103,522 3,783 -0- 24,761 55,986 14,264
Services, Home and Building
Control (4)
- -----------------------------------------------------------------------------------------------------------------------------------
W.M. Hjerpe 1998 396,267 339,715 104,631(6) 208,781 19,264 -0- 22,960
President, Honeywell 1997 361,531 320,000 171,282(6) -0- 21,500 545,912 20,484
Europe 1996 296,107 237,522 5,867 -0- 10,213 -0- 19,975
- -----------------------------------------------------------------------------------------------------------------------------------
D.K. Schwanz 1998 369,767 417,237(5) 13,915 208,781 20,000 -0- 27,462
President, Space and 1997 302,515 298,025 -0- 506,016 41,500 405,011 22,911
Aviation Control 1996 168,688 124,902 -0- -0- -0- -0- 17,389
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As of December 31, 1998, the number and value of total shares of restricted
stock held by the above officers is: M.R. Bonsignore (20,000 shares;
$1,506,250); G. Ferrari (20,000 shares; $1,506,250); J.K. Gilligan (20,693
shares; $1,558,442); W.M. Hjerpe (16,000 shares; $1,205,000); and D.K.
Schwanz (15,662 shares; $1,179,544). 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 1998, the dollar
value of each benefit is: M.R. Bonsignore; (a) $6,300, (b) $40,591; J.K.
Gilligan (a) $6,300, (b) $12,385; W.M. Hjerpe; (a) $6,300, (b) $16,660; and
D.K. Schwanz; (a) $6,300, (b) $21,162.
(3) G. Ferrari became an executive officer on April 15, 1997.
(4) J. Gilligan became an executive officer on September 16, 1997.
(5) Under the terms of the Corporate Executive Compensation Plan, a portion of
this amount will be payable in restricted stock following a three-year
vesting period, as follows: J. Gilligan - $12,892; payable in 180 shares;
and D. Schwanz - $32,876; payable in 459 shares.
(6) Amounts principally represent relocation allowances in connection with
foreign assignments.
18
<PAGE> 22
OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed Annual
Rates of Stock Price Appreciation for Option
Individual Grants(1) Term (2)
-------------------------------------------------- ---------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 0% ($) 5% ($) 10% ($)
---- ---------- ---------- ----------- ---------- -------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
M.R. Bonsignore.............. 150,000 8.42 78.56 6/16/08 0 7,411,130 18,781,259
85,000 4.77 75.87 2/17/08 0 4,055,977 10,278,643
1,184 .07 84.41 7/17/05 0 40,684 94,812
1,183 .07 84.41 2/17/07 0 55,051 135,595
G. Ferrari................... 42,500 2.38 75.87 2/17/08 0 2,027,989 5,139,321
J.K. Gilligan................ 14,000 .79 75.87 2/17/08 0 668,043 1,692,953
1,120 .06 89.19 7/17/05 0 40,665 94,767
W.M. Hjerpe.................. 18,000 1.01 75.87 2/17/08 0 858,913 2,176,654
1,264 .07 79.03 7/18/05 0 40,668 94,773
D.K. Schwanz................. 20,000 1.12 75.87 2/17/08 0 954,348 2,418,504
All Shareowners(3)........... N/A N/A N/A N/A 6,027,733,715 15,275,460,711
All Optionees................ 1,781,703 100.0 77.08 N/A 0 82,166,979 207,418,741
All Optionees Gain as % of
All Shareowners' Gain...... N/A N/A N/A N/A N/A 1.4% 1.4%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In general, stock options become exercisable one year after the grant date,
and the option exercise price may be paid in cash, shares or a combination.
Effective January 1999, options granted to executive officers will become
exercisable following a three-year vesting period. Stock options are subject
to a reload feature: when an 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. The options shown above for M.
Bonsignore, J. Gilligan, and W. Hjerpe include grants of reload stock
options.
(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 are not intended to forecast possible future appreciation, if any, in
the Company's stock price.
(3) For "All Shareowners" the gain is calculated from $75.87, the fair market
value of the Company's common stock on February 17, 1998, when stock options
were granted to executive officers, and is measured over the ten-year period
ending February 16, 2008, when those stock options expire.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at at
FY-End (#) FY-End ($)
Shares Acquired Value --------------------------- ---------------------------
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
M.R. Bonsignore...... 61,423 3,630,216 410,142 237,367 13,156,411 -0-
G. Ferrari........... -0- -0- 61,499 42,500 266,450 -0-
J.K. Gilligan........ 5,831 295,161 31,734 50,120 785,058 591,096
W.M. Hjerpe.......... 10,934 464,610 81,951 44,264 1,787,087 728,908
D.K. Schwanz......... 6,172 335,562 55,538 20,000 77,940 -0-
</TABLE>
19
<PAGE> 23
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 .
<TABLE>
<CAPTION>
Estimated future payouts under
Number of Performance or non-stock price-based plans
shares, units other period -------------------------------
or other until maturation Threshold Target/Maximum
Name rights (#) or payout (#)(1) (#)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
M.R. Bonsignore.......................... 36,000 3 years 21,006 36,000
G. Ferrari............................... 18,000 3 years 10,503 18,000
J.K. Gilligan............................ 1,807 3 years 1,054 1,807
W.M. Hjerpe.............................. 10,000 3 years 5,835 10,000
D.K. Schwanz............................. 9,838 3 years 5,740 9,838
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The amounts represent the minimum payout if a certain level of performance
is achieved.
REPORT ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
COMPENSATION PHILOSOPHY
The Personnel Committee of the Board of Directors adopted a management
compensation program based on the following compensation principles:
- -Honeywell provides the level of total compensation necessary to attract and
retain the best executives in its industries.
- -Compensation is linked to performance and to the interests of shareowners.
- -Incentive compensation programs recognize both individual and team performance.
- -Compensation balances rewards for short-term vs. long-term results.
- -Compensation programs include features that encourage executives to take a
long-term career commitment to Honeywell and its shareowners.
- - Plans include measurements based on continuous growth and performance relative
to peer companies.
COMPENSATION METHODOLOGY
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 consisting of 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 cash 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 operate
in businesses similar to Honeywell's and compete for executives with experience
and skills similar to those Honeywell requires. Several additional broad-based
surveys are also consulted,
20
<PAGE> 24
for purposes of verifying the findings of the primary survey and determining
stock option grant practices and trends. The target for long-term compensation
is the 65th percentile.
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 Corporate Executive Compensation Plan 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: (1) executive grade level; (2) individual
performance; and (3) spending guidelines approved by the Committee. The
Committee approves all salary increases for executive officers. In general,
salaries for executive officers for 1998 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. For
executive officers, the percentage for 1998 performance ranged from 40% of
salary to 70% of salary, in the case of the CEO. Annual incentive for 1998 was
targeted at the median of the compensation peer group. Under the Plan, payouts
may range from 0% to 300% of the target incentive. Any amounts over 200% are
paid in restricted stock rather than cash.
Annual incentive payments are based on a formula that includes both
internal and external measures. The Committee believes it is valuable to use
external benchmarks in conjunction with internal measures to provide a balanced
measure of performance.
Internal Measure. The initial calculation is based 60% on meeting the
Company's net income objectives and 40% on meeting controlled working capital
objectives. Because of the degree of difficulty of the plan objectives, meeting
the objectives results in a payout of 120% of the target incentive.
External Measure. Results are modified higher or lower based on Company
performance against a group of 18 peer companies in the following three
categories: total shareholder return; return on equity and earnings per share
growth.
Approximately 78% of U.S. Honeywell employees are eligible to receive
incentive or variable compensation. The Company uses a formula similar to the
one described above to determine incentive compensation for eligible employees
below the executive level.
At the corporate level, the Company's net income performance slightly
exceeded the 1998 plan objective, while working capital performance was slightly
less than the plan objective, resulting in a payout of 117% of the target. As a
result of the Company's first quartile performance against its peer companies in
the categories described above, payouts were increased to 158.5% of the target
incentive. However, since targets vary by business units, payouts under the Plan
21
<PAGE> 25
ranged from 0% to approximately 255%
of the individual's target incentive. The Bonus column of the Summary
Compensation Table on page contains the annual incentive payment for 1998
performance for each of the most highly compensated executive officers.
- - LONG TERM INCENTIVE COMPENSATION
The principal components of long-term compensation are stock options, which
are granted annually and performance shares, which are granted every three years
at the beginning of the performance period.
In addition, the Committee periodically 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.
Stock Options. Based on 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 each executive based on the following
criteria:
- - the executive's ability to impact financial performance in terms of
profitability and revenue;
- - the executive's past performance;
- - expectations of the executive's future potential.
The Committee reviews and approves stock option grants to executive
officers. Options granted have an exercise price equal to the fair market value
of Honeywell common stock on the date of grant. Options granted prior to 1999
were typically exercisable one year from the date of grant, while options
granted beginning in 1999 will vest over a three-year period.
Performance Share Program. The Performance Share Program provides grants of
performance share units which executives may earn if certain objectives are met
over a specified performance period. The target number of performance share
units varies by grade level. The Committee selects the eligible participants for
the program, approves the performance objectives, and approves final awards paid
to executives at the end of the performance period.
No payments will be made under the Program until the end of the 1998-2000
performance measurement period. Final awards for the 1998-2000 performance
period will be based on meeting objectives for cumulative revenue growth and
cumulative economic value added over the performance period.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Michael R. Bonsignore became Chairman of the Board and Chief Executive
Officer at the 1993 Annual Meeting of Shareowners. The non-employee directors
meet annually, in private, to review Mr. Bonsignore's performance. The Personnel
Committee uses this performance evaluation in determining Mr. Bonsignore's
compensation.
Mr. Bonsignore's total annual compensation for 1998, including salary and
annual incentive target, was approximately at the median for his position, in
both of the primary and secondary surveys used to determine cash compensation.
In February 1998, the Committee approved a 7.5% salary increase for Mr.
Bonsignore.
In 1995, shareowners approved the Honeywell Senior Management Performance
Incentive Plan, which was designed to preserve the Company's tax deduction for
incentive compensation paid to certain
22
<PAGE> 26
executives. Incentive compensation in any given year under that plan for Mr.
Bonsignore may be either (1) 35% of an incentive compensation pool consisting of
1% of income from continuing operations before income taxes, or (2) a lesser
amount based on criteria used to determine payouts under the Corporate Executive
Compensation Plan and the Performance Share program.
For 1998, 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 1998, Mr. Bonsignore received a payment of $1,068,654,
representing 158.5% of his target incentive.
Mr. Bonsignore received a grant of 85,000 stock options under the Company's
regular stock option program in February 1998.
When Mr. Bonsignore became Chairman and CEO in 1993, the Committee granted
him 55,000 stock options and 30,000 shares of restricted stock as an incentive
to retain him as CEO. These grants vested in April of 1998. In June 1998, in
order to provide a continued incentive to retain Mr. Bonsignore as CEO, the
Committee granted him 150,000 stock options and 20,000 shares of restricted
stock, 50% which vest in April 2001 and 50% which vest in April 2003.
IMPACT OF 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. Honeywell has designed
most of its executive compensation programs to preserve its ability to deduct
compensation paid to executives under these programs. However, this provision
had an immaterial impact on the Company in 1998 due to the scheduled vesting of
shares of restricted stock, which were granted prior to the effective date of
Section 162(m) and do not qualify under that provision.
EMPLOYMENT AGREEMENTS
When Mr. Ferrari became President of Honeywell Europe in 1992, he entered
into an employment agreement with Honeywell Europe which provided for certain
salary and benefits in accordance with Belgian law. When Mr. Ferrari was
promoted to President and Chief Operating Officer of Honeywell in 1997, his
compensation was increased to reflect his promotion and his benefits were
adjusted to accommodate his relocation to the United States. Mr. Ferrari's
current position is considered to be an international assignment under his
Belgian employment contract; therefore, the contract remains in effect until his
retirement from the Company. Please see the Summary Compensation Table on page
for details regarding Mr. Ferrari's compensation for 1998.
SUBMITTED BY THE PERSONNEL COMMITTEE OF THE BOARD OF DIRECTORS:
A. B. Rand (Chairperson)
A. J. Baciocco, Jr.
J. J. Howard
B. Karatz
M. W. Wright
INSIDER PARTICIPATION AND DIRECTOR INTERLOCKS
James J. Howard, Chairman and Chief Executive Officer of Northern States
Power Company, is a member of the Honeywell Board of Directors. Giannantonio
Ferrari, President and Chief Operating Officer of Honeywell, became a member of
the Board of Directors of
23
<PAGE> 27
Northern States Power Company in 1997. Mr. Howard has been a member of the
Honeywell Personnel Committee since he joined the Honeywell Board in 1990.
However, since the time that Mr. Ferrari joined the Northern States Power Board,
Mr. Howard has abstained from voting on all matters considered by the Personnel
Committee or the full Board dealing with Mr. Ferrari's compensation. Mr. Ferrari
is not a member of the compensation committee of Northern States Power Company.
24
<PAGE> 28
PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
This graph compares the cumulative total shareowner return on Honeywell's
common stock for the last five fiscal years with the cumulative total return of:
- The S&P 500 Index, and
- A Custom Peer Group of 18 companies which Honeywell uses to determine
various aspects of incentive compensation.
The graph assumes the investment of $100 in Honeywell's common stock, the
S&P 500 Index, and the Custom Peer Group identified below at the market close on
December 31, 1993, and the reinvestment of all dividends.
<TABLE>
<CAPTION>
HONEYWELL S&P 500 CUSTOM PEER GROUP
--------- ------- -----------------
<S> <C> <C> <C>
'Dec-93' 100 100 100
'Dec-94' 95 101 99
'Dec-95' 150 139 140
'Dec-96' 207 171 187
'Dec-97' 219 229 256
'Dec-98' 244 294 340
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
DEC-93 DEC-94 DEC-95 DEC-96 DEC-97 DEC-98
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Honeywell 100 95 150 207 219 244
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 100 101 139 171 229 294
- ---------------------------------------------------------------------------------------------------------------------
Custom Peer Group 100 99 140 187 256 340
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
*Custom Peer Group consists of AlliedSignal Inc., AMP Inc., Cooper Industries,
Dover Corp., Eaton Corp., Emerson Electric Co., General Electric Company,
Johnson Controls Inc., Litton Industries Inc., Parker-Hannifin Corp., Raytheon
Co., Rockwell International, Siebe Plc ADR, Textron, Inc., TRW Inc., Tyco
International, United Technologies, and York International.
**Due to changes in control of General Signal Corp. and Westinghouse Electric,
the 1998 Custom Peer Group has been revised to replace General Signal Corp.
with Textron, Inc. and delete Westinghouse Electric, resulting in a decrease
in the group from 19 to 18 companies.
25
<PAGE> 29
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 30% 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 21 of
its executives. 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.
26
<PAGE> 30
PENSION PLAN TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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>
$ 200,000 $ 45,354 $ 60,472 $ 75,590 $ 90,708 $ 95,708
---------------------------------------------------------
400,000 93,354 124,472 155,590 186,708 196,708
---------------------------------------------------------
600,000 141,354 188,472 235,590 282,708 297,708
---------------------------------------------------------
800,000 189,354 252,472 315,590 378,708 398,708
---------------------------------------------------------
1,000,000 237,354 316,472 395,590 474,708 499,708
---------------------------------------------------------
1,200,000 285,354 380,472 475,590 570,708 600,708
---------------------------------------------------------
1,400,000 333,354 444,472 555,590 666,708 701,708
---------------------------------------------------------
1,600,000 381,354 508,472 635,590 762,708 802,708
---------------------------------------------------------
1,800,000 429,354 572,472 715,590 858,708 903,708
---------------------------------------------------------
2,000,000 477,354 636,472 795,590 954,708 1,004,708
---------------------------------------------------------
2,200,000 525,354 700,472 875,590 1,050,708 1,105,708
---------------------------------------------------------
2,400,000 573,354 764,472 955,590 1,146,708 1,206,708
---------------------------------------------------------
2,600,000 621,354 828,472 1,035,590 1,242,708 1,307,708
- ---------------------------------------------------------------------------------------------------------------------------
</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 Honeywell Retirement Benefit Plan, which is a
defined benefit plan that does not require employee contributions. Compensation
used for pension 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 current
executive officers in the table on page are: M.R. Bonsignore--28 years; G.
Ferrari--38 years; J.K. Gilligan--21 years; W.M. Hjerpe--24 years; and D.K.
Schwanz--19 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
- --------------------------------------------------------------------------------
SUBMISSION OF DIRECTOR NOMINATIONS AND SHAREOWNER PROPOSALS
The Nominating and Governance Committee of the Board of Directors will
consider qualified nominees for director recommended by shareowners.
- - In order for a shareowner proposal to be considered for inclusion in
Honeywell's proxy statement for the 2000 Annual Meeting, the proposal must be
received at the Company's offices no later than November , 1999. Securities
and Exchange Commission rules contain standards as to what shareowner
proposals are required to be included in a proxy statement.
- - In addition, the Company's By-laws provide that any shareowner wishing to make
a nomination for director, or wishing to introduce a proposal at the Company's
Annual Meeting of Shareowners must notify the Company not more than 120 days
and not less than 90 days prior to the meeting, and that notice must meet
other requirements contained in the By-laws.
27
<PAGE> 31
Any shareowner who wishes to submit a shareowner proposal or a nomination
for director, or who would like to receive a copy of the relevant section of the
By-laws, should contact the Vice President and Corporate Secretary, Honeywell
Plaza, Minneapolis, Minnesota, 55408.
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 1999 Annual
Meeting of Shareowners at a fee of approximately $18,000 plus associated costs
and expenses.
By Order of the Board of Directors,
Kathleen M. Gibson
Kathleen M. Gibson
Vice President and Corporate Secretary
See enclosed proxy card--please vote by internet, telephone or sign card and
mail promptly.
28
<PAGE> 32
HELP ELIMINATE DUPLICATE MAILINGS
SECURITIES AND EXCHANGE COMMISSION RULES PERMIT US TO SEND A SINGLE COPY OF
THE ANNUAL REPORT TO HONEYWELL SHAREOWNERS RESIDING IN THE SAME HOUSEHOLD WITH
SHAREOWNER CONSENT. IF THE ANNUAL REPORT ACCOMPANYING THIS PROXY STATEMENT IS A
DUPLICATE COPY FOR YOUR HOUSEHOLD, YOU MAY DISCONTINUE RECEIVING THIS DUPLICATE
COPY BY MARKING THE APPROPRIATE BOX ON YOUR PROXY CARD OR SO INDICATING WHEN
PROMPTED DURING TELEPHONE OR INTERNET VOTING. IF YOU CHOOSE TO DO SO, WE WILL
NOT SEND FUTURE ANNUAL REPORTS TO THE ACCOUNT ADDRESS LISTED ON THAT PROXY CARD,
UNLESS YOU REQUEST THAT WE RESUME SUCH MAILINGS.
HONEYWELL LOGO
- --------------------------------------------------------------------------------
Honeywell Inc.
Honeywell Plaza
Minneapolis, Minnesota 55408
Recycled Paper with a Minimum
of 10% Post Consumer Waste
(LOGO)
PRINTED IN U.S.A.
<PAGE> 33
HONEYWELL INC.
PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREOWNERS ON APRIL 20, 1999
(I)(We) hereby appoint(s) M.R. Bonsignore, E.D. Grayson and K.M. Gibson, and
each of them, proxies (each with power of substitution) to attend the above
annual meeting of shareowners of Honeywell Inc. and any adjournment, to vote all
shares of Honeywell stock that (I)(we) hold of record, including any shares held
under the Dividend Reinvestment Plan administered by ChaseMellon Shareholder
Services, L.L.C., for all matters described on the reverse side of this card,
and on any other matter that may properly come before the meeting.
The Honeywell Savings and Stock Ownership Plan requires that the Trustee receive
voting instructions for shares held under the plan by April 15, 1999. To meet
this requirement, either complete this card and mail it to be received no later
than April 15, or vote by telephone or via the Internet by April 15. After April
15, your voting instructions for Plan shares cannot be revoked. Also, you may
not vote Plan shares in person at the meeting. The Trustee is authorized to vote
the Plan shares for which instructions have been given on any other business
that may come before the meeting. ChaseMellon Shareholder Services, L.L.C. will
tally the vote on behalf of the Trustee.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE VOTE VIA THE INTERNET OR TELEPHONE OR SIGN ON THE REVERSE SIDE AND MAIL
PROMPTLY.
------------------------------------------------------------------------------
| |
|Comments: |
| |
------------------------------------------------------------------------------
See Reverse Side
- -------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
IF VOTING BY MAIL, RETURN PROXY CARD IN THE ENCLOSED ENVELOPE. PLEASE BE SURE
TO SIGN AND DATE THE CARD.
ADMISSION TICKET
HONEYWELL INC. [MAP]
1999 ANNUAL MEETING OF SHAREOWNERS
TUESDAY, APRIL 20, 1999, 2:00 P.M.
MINNEAPOLIS CONVENTION CENTER
1301 SECOND AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55403
(612) 335-6000
The Meeting will be held in Ballroom A.
Public entrances are located on Second Avenue S. and Grant St., which are
labeled as follows: Ballroom Entrance, Hall 1, Hall 2 & Hall 3. Handicap access
is adjacent to the Hall 3 entrance on Third Avenue and 12th Street (closest to
Wesley Church).
Parking is generally available underground in the Plaza Ramp, entering either on
Second Avenue S. or on 12th Street S. Elevators and a skyway connect the Ramp to
the Convention Center. Additional parking is available as indicated on the
adjacent map.
<PAGE> 34
Please mark
your votes as
indicated in
this example [X]
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
1. ELECTION OF DIRECTORS
FOR all Nominees
(Except as marked
to the contrary*)
NOMINEES: (01) A.J.Baciocco, Jr., (02) E.E.Bailey,
(03) M.R.Bonsignore, (04) J.C.Pardo, (05) G.Ferrari,
(06) R.D.Fullerton, (07) J.J.Howard,
(08) K.M.Hudson, (09) B.Karatz, (10) A.B.Rand,
(11) S.G.Rothmeier, (12) M.W.Wright
*INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME ABOVE.
TO WITHHOLD
AUTHORITY (For all
Nominees listed) [ ]
FOR AGAINST ABSTAIN
2. RATIFICATION OF [ ] [ ] [ ]
DELOITTE & TOUCHE LLP
AS AUDITORS
FOR AGAINST ABSTAIN
3. APPROVAL OF AMENDMENT [ ] [ ] [ ]
OF RESTATED ARTICLES OF
INCORPORATION TO
INCREASE AUTHORIZED
COMMON SHARES
THIS PROXY WILL BE VOTED FOR ITEMS 1-3 IF NO CHOICE IS SPECIFIED.
Will attend meeting
Discontinue Duplicate [ ]
Annual Report
Change of Address [ ]
IF VOTING VIA THE INTERNET OR TELEPHONE, PLEASE FOLLOW INSTRUCTIONS BELOW
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.
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
YOU CAN NOW VOTE YOUR SHARES VIA THE INTERNET OR BY TELEPHONE
To Vote Via the Internet:
1. Go to the following website [ ]. You may vote through 4:00 p.m.
Eastern Standard Time on April 19, 1999.
2. Enter your Control Number, which is located in the box at the lower right
hand corner of this instruction form.
3. Follow the on-line instructions on your computer screen.
To Vote by Telephone:
1. If you have a touch-tone telephone, call 1-800-435-6710. This is a TOLL-FREE
number. You may call 24 hours a day through 4:00 p.m. Eastern Standard Time on
April 19, 1999.
2. Enter your Control Number, which is located in the box at the lower right
hand corner of this instruction form.
OPTION #1: To vote as the Board of Directors recommends on ALL proposals, press
1. If you wish to vote on each proposal separately, press 2. (When you press 1
here, your vote will be confirmed and cast as you directed).
OPTION #2: If you choose to vote on each proposal separately, press 2 and follow
the recorded instructions.
3. Following voting, also confirm if you plan to attend the meeting in
Minneapolis, and if you wish to discontinue receiving a duplicate Annual Report.
Your vote on all proposals will be repeated and you will have an opportunity to
confirm it.
IF YOU VOTE VIA THE INTERNET OR BY TELEPHONE, DO NOT RETURN
YOUR PROXY CARD BY MAIL. THANK YOU FOR VOTING.
