JOHNSON CONTROLS INC, DEF 14A, 1998-12-03

JOHNSON CONTROLS INC
DEF 14A, 1998-12-03
PUBLIC BLDG & RELATED FURNITURE

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<PAGE> 1
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 [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Johnson Controls, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

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(2) Form, schedule or registration statement no.:

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(4) Date filed:

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<PAGE> 2

[Johnson Controls, Inc. LOGO]

JOHNSON CONTROLS, INC.
5757 N. Green Bay Ave.
Milwaukee, Wisconsin 53209

ANNUAL SHAREHOLDERS MEETING
NOTICE AND PROXY STATEMENT

ANNUAL
MEETING: January 27, 1999 Italian Community Center
2:00 p.m. CST 631 East Chicago
Milwaukee, WI 53202

RECORD DATE: November 18, 1998. If you were a shareholder at the
close of business on that date, then you may vote at
the meeting. If you hold the Company's Common Stock,
then you are entitled to one vote per share. If you
hold the Company's Preferred Stock (each share consists
of 10,000 units) you are entitled to two votes per
unit. There is no cumulative voting. On the record
date, 84,807,704 shares of our Common Stock were
outstanding, and 272.838 shares of our Preferred Stock
were outstanding.

AGENDA: 1. Elect 3 directors.

2. Ratify the selection of PricewaterhouseCoopers LLP
as our independent auditors for 1999.

3. Ratify the Long Term Performance Plan

4. Ratify the Executive Incentive Compensation Plan.

5. Any other proper business.

Unless you tell us on the proxy card to vote
differently, we will vote signed returned proxies "FOR"
the Board's nominees in Item 1 and "FOR" agenda items 2
through 4. The Board or proxy holders will use their
discretion on other matters that may arise at the
meeting under Item 5. If a nominee cannot or will not
serve as a director, then the Board or proxy holders
will vote for a person whom they believe will carry on
our present policies.

PROXIES
SOLICITED BY: The Board of Directors.

FIRST MAILING
DATE: The Company anticipates first mailing this proxy
statement on December 4, 1998.
<PAGE> 3

REVOKING
YOUR PROXY You may revoke your proxy before it is voted at the
meeting. To revoke:

- Deliver a signed, written revocation letter, dated
later than the proxy, to John P. Kennedy, Secretary,
at our Milwaukee address listed on the first page;

- Submit a proxy with a later date; or

- Attend the meeting and vote in person or by proxy.
Attending the meeting alone will not revoke your
proxy.

PROXY
SOLICITATION: The Company will primarily solicit proxies by mail and
will cover the expense of such solicitation. D.F. King
& Co., Inc., will help us solicit proxies for all
brokers and nominees at a cost of $11,000 plus their
expenses. Our officers and employees may also solicit
proxies for no additional compensation. We may
reimburse brokers or other nominees for reasonable
expenses they incur in sending these proxy materials to
you if you are a beneficial holder of our shares.

ANNUAL REPORT: The Company's 1998 Annual Report is being mailed to you
with this proxy statement.

YOUR COMMENTS: Your comments about any aspects of our business are
welcome. You may use the space provided on the proxy
card for this purpose, if desired.

PLEASE VOTE -- YOUR VOTE IS IMPORTANT
PROMPT RETURN OF YOUR PROXY WILL HELP REDUCE THE COST OF THIS SOLICITATION.
<PAGE> 4

CONTENTS

<TABLE>
<S> <C>
*ELECTION OF DIRECTORS...................................... 3
BOARD INFORMATION........................................... 7
BOARD COMPENSATION.......................................... 9
COMPENSATION COMMITTEE REPORT............................... 10
PERFORMANCE GRAPH........................................... 14
EXECUTIVE COMPENSATION...................................... 15
EMPLOYMENT AGREEMENTS....................................... 20
*SELECTION OF INDEPENDENT AUDITORS FOR FISCAL YEAR 1999..... 21
COMPENSATION PLANS SUBJECT TO SHAREHOLDER APPROVAL.......... 21
*RATIFICATION OF LONG TERM PERFORMANCE PLAN................. 22
*RATIFICATION OF THE EXECUTIVE INCENTIVE COMPENSATION
PLAN...................................................... 24
JOHNSON CONTROLS SHARE OWNERSHIP............................ 25
VOTING PROCEDURES........................................... 27
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 28
SUBMISSION OF SHAREHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS............................................... 28
MAP TO ANNUAL MEETING....................................... 29
EXHIBIT A...................................................
EXHIBIT B...................................................
</TABLE>

- -------------------------
* Agenda items for the Annual Meeting
<PAGE> 5

2
<PAGE> 6

ELECTION OF DIRECTORS

BOARD STRUCTURE: The Board of Directors consists of 12 members. The
directors are divided into three classes. At each
annual meeting, the term of one class expires.
Directors in each class serve for three-year terms, or
until the director's earlier retirement pursuant to the
Board of Directors Retirement Policy.(1)

BOARD NOMINEES

NOMINEES FOR TERMS TO EXPIRE AT THE 2002 ANNUAL MEETING:

<TABLE>
<S> <C>
NATALIE A. BLACK NATALIE A. BLACK Director since 1998
PHOTO Age 48

Group President, Kohler Co., Kohler, Wisconsin
(manufacturer and marketer of plumbing products and
furniture) since 1998. Group Vice President -- Interiors
from 1986 through 1998 and Vice President from 1983
through 1986. Ms. Black has also served as General
Counsel for Kohler Co. since 1991.

ROBERT A. CORNOG ROBERT A. CORNOG Director since 1992
PHOTO Age 58

President, Chief Executive Officer and Chairman of the
Board of Directors of Snap-on, Incorporated, Kenosha,
Wisconsin (tool manufacturer) since 1991. Mr. Cornog is a
director of Snap-on Incorporated, Wisconsin Electric
Power Company, and Wisconsin Energy Corporation. Mr.
Cornog is a member of the Audit and the Executive
Committees.

</TABLE>

- ---------------

1 The Board of Directors has adopted a Retirement Policy that requires a
director to retire as of the last regular Board of Director's meeting held in
the year of his or her 70th birthday. However, if a shareholder's meeting is
held on that date, then such retirement is to be effective the next day.

3
<PAGE> 7
<TABLE>
<S> <C>
KEYS PHOTO JAMES H. KEYES Director since 1985
Age 58

Chairman and Chief Executive Officer, Johnson Controls,
Inc. In 1985 Mr. Keyes was named Executive Vice President
and subsequently became Chief Operating Officer and a
member of the Board of Directors. He became President of
Johnson Controls, Inc., in 1986, its Chief Executive
Officer in 1988, and Chairman in 1993. Mr. Keyes is a
director of LSI Logic Corporation and Pitney Bowes, Inc.
Mr. Keyes is Chairman of the Executive Committee.

LACY PHOTO WILLIAM H. LACY Director since 1997
Age 53

President (1987 to 1996) and Chairman (1996 to present)
and Chief Executive Officer of Mortgage Guaranty
Insurance Corporation (MGIC), and President and CEO of
its parent company, MGIC Holding Company, Milwaukee,
Wisconsin (secondary mortgage market activities) since
1987. Mr. Lacy is a director of Firstar Bank Milwaukee,
N.A., Columbia Health System, Inc., and MGIC Investment
Corporation. Mr. Lacy is a member of the Compensation and
the Pension and Benefits Committees.
</TABLE>

THE BOARD RECOMMENDS THAT YOU VOTE "FOR" ITS NOMINEES.

CONTINUING DIRECTORS

TERMS EXPIRE AT THE 2000 ANNUAL MEETING

<TABLE>
<S> <C>
BARTH PHOTO JOHN M. BARTH Director since 1997
Age 52

President and Chief Operating Officer, Johnson Controls,
Inc., since September 1998 and Executive Vice President
since 1991. In 1987, Mr. Barth was named Vice President
and General Manager of the Plastics Technology Group. In
1990, he became Vice President and General Manager of the
Plastics Technology Group and the Automotive Systems
Group. Mr. Barth is a director of Handleman Company and
Edwards Brothers.

BRUNNER PHOTO PAUL A. BRUNNER Director since 1983
Age 63

President and Chief Executive Officer, Spring Capital
Inc., Stamford, Connecticut (international investment
management), since 1985. President and Chief Executive
Officer, ASEA, Inc., 1982-1984. President and Chief
Executive Officer, Crouse Hinds Co., 1967-1982. Mr.
Brunner is the Chairman of the Audit Committee and member
of Compensation Committee.
</TABLE>

4
<PAGE> 8
<TABLE>
<S> <C>
MORCOTT PHOTO SOUTHWOOD J. MORCOTT Director since 1993
Age 60

Chairman since 1990, President 1986-1996, and Chief
Executive Officer since 1989 of Dana Corporation, Toledo,
Ohio (vehicular and industrial systems manufacturer). Mr.
Morcott is a director of CSX Corporation, Dana
Corporation and Phelps-Dodge Corporation. Mr. Morcott is
Chairman of the Compensation Committee and member of the
Directors Committee.

KEYS PHOTO GILBERT R. WHITAKER JR. Director since 1986
Age 67

Dean and H.J. Nelson Professor of Business Economics,
Jesse Jones Graduate School of Management, Rice
University since July of 1997. Professor of Business
Economics, University of Michigan, 1979 through June 30,
1997. Provost and Executive Vice President for Academic
Affairs, University of Michigan, 1990-1996. Mr. Whitaker
served as Dean, School of Business Administration,
University of Michigan 1979-1990. Mr. Whitaker is a
director of Handleman Company, Lincoln National
Corporation, and Structural Dynamics Research Corp. Mr.
Whitaker is Chairman of the Pension and Benefits
Committee.
</TABLE>

TERMS EXPIRE AT THE 2001 ANNUAL MEETING:

<TABLE>
<S> <C>
ANDREWS PHOTO WILLIAM F. ANDREWS Director since 1991
Age 67

Chairman of Scovill Fasteners Inc., Clarksville, Georgia
(manufacturer of apparel fasteners) since 1995. Chairman,
President and Chief Executive Officer, Amdura Corporation
from 1993-1996. President and Chief Executive Officer,
UNR Industries Inc., Chicago, Illinois (diversified
manufacturer) from 1991-1993, President of Massey
Investment Co., Nashville, Tennessee (private investment
company) from 1989-1990, and Chairman, CEO and President
of Singer Sewing Machine Company (SSMC) Inc., Shelton,
Connecticut (diversified manufacturer) from 1986-1989.
Mr. Andrews is a director of Black Box Corp., Dayton
Superior Corporation, Katy Industries, Navistar
International Corporation, Northwestern Steel & Wire Co.,
and Southern New England Telecommunications Corporation.
Mr. Andrews is a member of the Compensation and the
Directors Committees.
</TABLE>

5
<PAGE> 9
<TABLE>
<S> <C>
BARNETT PHOTO ROBERT L. BARNETT Director since 1986
Age 58

Executive Vice President and President, Commercial,
Government and Industrial Solutions Sector, Motorola,
Inc. (manufacturer of electronics products), Schaumburg,
Illinois, June 1998-present. Executive Vice President and
President, Motorola Inc., Land Mobile Products Sector,
Motorola Inc., March 1997 - March 1998. Corporate Vice
President, iDen Group, Motorola Inc., May 1995 - March
1997. Consultant in the field of international
communications 1992-1993. Vice-Chairman, Ameritech and
President, Ameritech Bell Group, American Information
Technologies Corporation, Chicago, Illinois
(telecommunications) 1989-1993 and President, Ameritech
Enterprise Group, 1987-1989. Mr. Barnett is a director of
USG Corp., Central Vermont Public Service, and Objectives
Communication. Mr. Barnett is a member of the Executive
and the Pension and Benefits Committees and the Chairman
of Directors Committee.

DAVIS PHOTO WILLIE D. DAVIS Director since 1991
Age 64

President of All Pro Broadcasting Incorporated, Los
Angeles, California (radio broadcasting), since 1977. Mr.
Davis is a director of Alliance Bank Co., Dow Chemical
Company, Kmart Corporation, MGM Grand Inc., Sara Lee
Corporation, Strong/Corneliuson Capital Management and
WICOR, Inc. Mr. Davis is a member of the Audit and the
Directors Committees.

TEERLINK PHOTO RICHARD F. TEERLINK Director since 1994
Age 62

Chairman of the Board of Harley-Davidson, Inc.
(motorcycle manufacturer), Milwaukee, Wisconsin, since
May 1996. President and Chief Executive Officer from
March 1989 - June 1997. Mr. Teerlink is a director of
Harley-Davidson and Snap-on Incorporated. Mr. Teerlink is
a member of Audit and the Executive Committees.
</TABLE>

6
<PAGE> 10

BOARD INFORMATION

BOARD MEETINGS: In 1998 the Board held a total of seven regular
quarterly and special meetings. All of the directors
attended at least 93% of his or her Board and committee
meetings with the exception of Mr. Teerlink who
attended 70% of the Board and committee meetings.

BOARD COMMITTEES: EXECUTIVE COMMITTEE: The primary functions of the
committee are to exercise all the powers of the Board
when the Board is not in session, as permitted by law.
The Executive Committee held no meetings last year.
Members: Mr. Keyes, Chairman, and Messrs. Brengel,*
Barnett, Cornog and Teerlink.

AUDIT COMMITTEE: The primary functions of the committee
are to:

- Review the internal controls established by
management;

- Assess the financial reporting process and selection
of accounting policies;

- Review management's evaluation and proposed selection
of independent accountants;

- Review the audit plans prepared by internal audit and
independent accountants;

- Review significant issues concerning litigation,
contingent liabilities, tax and insurance;

- Review management information systems;

- Monitor compliance procedures; and

- Report the results of these activities to the Board
on a periodic basis.

The Audit Committee held three meetings last year. All
members are non-employee directors. Members: Mr.
Brunner, Chairman, and Messrs. Cornog, Davis, and
Teerlink.

COMPENSATION COMMITTEE: The primary functions of the
committee are to:

- Recommend to the Board the selection and retention of
officers and key employees;

- ---------------
*Retired from the Board effective November 18, 1998.

7
<PAGE> 11

- Recommend salary structures, officer gradings, and
salaries for elected officers;

- Administer and recommend amendments to the executive
compensation plans;

- Recommend to the Board bonus awards, income and other
compensation to executive officers;

- Recommend officer compensation packages and the
approval of disclosure statements;

- Review the Company's executive compensation programs
with outside consultants; and

- Recommend management succession.

The Compensation Committee held four meetings last
year. Members: Mr. Morcott, Chairman, and Messrs.
Andrews, Brunner and Lacy.

DIRECTORS COMMITTEE: The primary functions of the
committee are to:

- Recommend to the Board nominees for directors;

- Consider shareholder nominated candidates for
election as directors;

- Recommend the size and composition of the Board;

- Develop guidelines and criteria for the
qualifications of directors;

- Recommend director compensation programs;

- Recommend committees and committee structure for the
Board;

- Recommend performance criteria for the Board and to
review its performance; and

- Review conflicts of interest that may affect
directors.

The Directors Committee held three meetings last year.
Members: Mr. Barnett, Chairman, and Messrs. Davis and
Morcott.

PENSION AND BENEFITS COMMITTEE: The primary functions
of the committee are to:

- Review actuarial assumptions and actuarial valuation
of the pension plans on an annual basis;

- Review investment policies of the funds of employee
benefit plans;

8
<PAGE> 12

- Select and terminate investment managers as
appropriate;

- Review with investment advisors past performance and
current investment strategy;

- Review and approve the adoption of any new trust
agreements or master trusts implementing the plans;

- Monitor Company policies affecting employee benefit
plans; and

- Review plan provisions annually, and propose
amendments when necessary.

The Pension and Benefits Committee held five meetings
last year. Members: Mr. Whitaker, Chairman, and Messrs.
Andrews, Barnett and Lacy.

BOARD COMPENSATION

RETAINER AND FEES: Non-employee directors receive a $37,500 annual
retainer. To encourage such directors to own our
shares, they receive 50% of their retainer in our
Common Stock each year. The stock is priced as of the
date of the Annual Meeting. New Directors also receive
a grant of 400 shares of Common Stock upon election or
appointment and a pro rata share of the annual retainer
for the remainder of that year. This stock is priced as
of the date of the first meeting of the Board at which
the new director participates. Directors also receive
$1,500 for each Board or committee meeting they attend,
or $2,000 for each meeting they attend of which they
are the Chairperson. We also reimburse directors for
any related expenses.

RETIREMENT PLAN: The Director's Retirement Plan provides that a director
who retires after attaining the age of 65 and has six
years of service will be paid the annual retainer in
effect upon his or her retirement for life. The annual
value for current directors under this plan ranges from
$9,508 to $26,462.

The Directors' Retirement Plan has been discontinued
for Fiscal 1999 and is being replaced by a Director
Share Unit Plan. Non-employee directors are eligible to
participate in the Director Share Unit Plan. The
Company will credit $25,000 worth of stock units
annually into each non-employee director's account at
the then current market price. Such units are
accumulated and credited with dividends until
retirement at which time the units will be paid out
based upon the market price of the Common Stock at that
time.
9
<PAGE> 13

For each current director, the Directors Committee is
placing a value on the director's entitlements under
the Directors' Retirement Plan as of September 30,
1998. The director will receive a credit to his account
under the Director Share Unit Plan of a number of stock
units having a value equal to the value of the
director's entitlements.

MEDICAL PLAN: Current directors who are not covered by other
insurance and who are under 65 years of age may
purchase medical coverage on the same basis as Company
employees.

COMPENSATION COMMITTEE REPORT

THE COMMITTEE: The Compensation Committee is composed only of
independent directors. The committee exercises the
Board's powers in compensating executive officers of
our Company and its subsidiaries. We make every effort
to see that our compensation program is consistent with
the values of our Company and furthers its business
strategy.

OVERALL OBJECTIVES: The Company aligns executive compensation with its
values and business objectives. The objectives target
customer satisfaction, technology, growth, market
leadership, and shareholder value. The Compensation
Committee has established a program to:

- Attract and retain key executives critical to the
long-term success of the Company.

- Reward executives for long-term strategic management
and the enhancement of shareholder value.

- Integrate compensation programs, which can focus on
after-tax return on shareholders equity, return on
investment and growth.

- Support a performance-oriented environment that
rewards performance not only with respect to Company
goals but also Company performance as compared to
that of industry performance levels.

- Preserve the federal income tax deductibility of
compensation paid. Accordingly, the Company has taken
appropriate actions to preserve the deductibility of
annual incentives, long-term performance plan
payments, and stock option awards. However, the
Committee may authorize payments that may not be
deductible if it believes that this is in the best
interests of the Company and its shareholders.

10
<PAGE> 14

EXECUTIVE The Compensation Committee reviews executive pay each
COMPENSATION year. Compensation depends on many factors, including
GENERALLY: individual performance and responsibilities, future
challenges and objectives, and how he or she might
contribute to our future success. We also look at the
Company's financial performance and the compensation
levels at comparable companies.

To meet the objectives, we studied competitive
compensation data based on surveys provided to the
Committee by an independent compensation consultant.
The survey for officers and senior managers involved 22
companies. We made adjustments to account for
differences in annual sales of our Company and those
companies in the survey.

TOTAL COMPENSATION: Annual executive compensation consists of a base salary
and incentive compensation.

Approximately 64% of the total compensation paid to the
executive officer group is performance related. This is
comparable to the average of the companies in the
executive compensation survey. Doing so helps encourage
performance that increases the value of your shares.

The Committee sets target minimum and maximum
performance levels for our annual and long-term
incentive plans substantially above the prior year's
target goals, and prior year's actual performance.
Doing so motivates the officers to encourage future
growth and keeps the goals challenging. The Company
continues to exceed its increased performance
objectives.

BASE SALARY: The Committee determines the levels of salary for key
executive officers and a salary range for other
executive officers. Factors considered are:

- Salary comparison survey results;

- Prior year salary;

- Changes in individual job responsibilities;

- Past performance of individuals; and most
importantly,

- Achievement or trends toward achievement of specified
Company goals.

ANNUAL INCENTIVES: The Committee sets an annual incentive award formula
under the Executive Incentive Compensation Plan (EICP).
The award is based on specific benchmarks that are
consistent with our annual and long-term strategic
planning objectives. These benchmarks are also based on
achievement of business plans that the Board has

11
<PAGE> 15

approved that include goals of improved performance
over the previous year and take into account industry
growth and cycles.

At the end of the fiscal year, the Committee applies
the formula to objective performance results to
determine the executive's award for the year.

LONG-TERM All executive officers participate in the Long Term
INCENTIVES: Performance Plan (LTPP), which serves to motivate
executives to achieve longer-term objectives by
providing incentive compensation based on our
performance over a three- year period. Under the LTPP,
the Committee assigns an executive a contingent
performance award. The executive may earn this award
based upon the Company's return on shareholder equity
during the specified three-year period relative to the
Standard & Poor's Manufacturers (Diversified
Industrial) Index median return on shareholders' equity
over the same period. At the end of the period, the
Committee determines the Company's relative performance
results to determine the actual LTPP award amount.

STOCK OWNERSHIP The Executive Stock Ownership Policy requires all
GUIDELINES: officers and senior managers in each business group,
within five years of becoming subject to the Policy, to
hold our Common Stock in an amount of one to three
times their annual salary.

The 1995 Common Stock Purchase Plan for Executives
(CSPPE) facilitates the acquisition of common stock by
executives subject to the Executive Stock Ownership
Policy. Participants in the CSPPE may deduct from their
pay up to $2,500 per month to purchase shares of Common
Stock. The price of each share is 100% of the average
price of shares purchased by Firstar Bank Milwaukee,
N.A. as agent for the participants. No brokerage fees
or commission are charged and the Company bears the
expense of administering the CSPPE.

STOCK OPTION The Committee grants stock options and stock
PROGRAM: appreciation rights (SARs) under the 1992 Stock Option
Plan. The Committee determines which individuals are
awarded stock options and SARs, the terms at which
option grants shall be made, the terms of the options,
and the number of shares subject to each option. In
1998, compensation to executives through stock options
and SARs and the LTPP, taken together, was targeted at
the 50th percentile of such compensation granted by
similar companies as identified in the survey.

12
<PAGE> 16

SAVINGS AND Executive officers may participate in the Company's
INVESTMENT Savings and Investment Plan, which includes Company
PLAN (401K): contributions to the plan, and an Equalization Benefit
Plan under which certain executives are entitled to
additional benefits that cannot be paid under qualified
plans due to Internal Revenue Code limitations.
Employee and Company contributions in excess of
qualified plan limits are accounted for as if invested
in various accounts.

CEO COMPENSATION: Mr. Keyes' total compensation is based on our Company's
outstanding performance, his individual performance,
executive compensation levels at other companies, the
desire to retain his services and terms of his
employment agreement. His salary and incentives reflect
the leadership, vision and focus he has provided to our
Company.

Mr. Keyes' base salary increased to $975,000 in 1998,
from $900,000 in 1997. This salary approximated the
average base salary for other chief executive officers
for the 22 companies reviewed.

Approximately 75% of Mr. Keyes' compensation is tied to
performance goals. Mr. Keyes fiscal 1998 EICP award of
$826,000 is based upon the return on shareholder's
equity and operating income growth for the Company for
fiscal 1998 and represents 83% of the maximum amount
available under the criteria set forth by the
Committee. In fiscal 1998, Mr. Keyes received payment
under the LTPP of $810,000, which is based upon the
Company's return on shareholder equity over the past
three fiscal years and represents 100% of the maximum
amount available under the criteria established by the
Committee. Mr. Keyes received an option award of
120,000 shares on November 19, 1997.

Southwood J. Morcott, Chairman
William F. Andrews
Paul A. Brunner
William H. Lacy
Members, Compensation Committee

13
<PAGE> 17

PERFORMANCE GRAPH

EXPLANATION OF THE
GRAPH: The line graph below compares the cumulative total
shareholder return on our Common Stock with the
cumulative total return of companies on the Standard &
Poor's 500 Stock Index and the S&P Manufacturers
(Diversified Industrial) Index. This graph is based on
the market price of the Common Stock and assumes the
reinvestment of dividends.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG S&P 500 INDEX,
S&P MANUFACTURERS (DIVERSIFIED INDUSTRIAL)
INDEX AND JOHNSON CONTROLS, INC.

<TABLE>
<CAPTION>
MANUFACTURERS
JOHNSON (DIVERSIFIED S&P 500
CONTROLS INC INDUSTRIAL) COMP-LTD
<S> <C> <C> <C>
SEP93 100 100 100
SEP94 94.03 111.12 103.69
SEP95 123.03 148.15 134.5
SEP96 149.27 190.91 161.84
SEP97 201.29 265.75 227.26
SEP98 192.19 239.61 247.85
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
COMPANY/INDEX 9/93 9/94 9/95 9/96 9/97 9/98
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Johnson Controls Inc. 100 94.03 123.03 149.27 201.29 192.19
- ----------------------------------------------------------------------------------------------
Manufacturers (Diversified
Industrials) 100 111.12 148.15 190.91 265.75 239.61
- ----------------------------------------------------------------------------------------------
S&P 500 Comp-Ltd 100 103.69 134.50 161.84 227.26 247.85
- ----------------------------------------------------------------------------------------------
</TABLE>

Assumes $100 invested on September 30, 1993 in S&P 500 Index, S&P Manufacturers
(Diversified Industrial) Index and Johnson Controls, Inc., and dividends are
reinvested at the end of month in which they are paid.

14
<PAGE> 18

EXECUTIVE COMPENSATION

SUMMARY OF
COMPENSATION: The following table summarizes the compensation we paid
for the past three fiscal years to each of the five
most highly compensated executive officers, including
the Chief Executive Officer.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
OTHER ANNUAL OPTIONS/ LONG-TERM ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION SARS INCENTIVE COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#)(2) PAYOUTS($) ($)(3)
------------------ ------ ------ ----- ------------ -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James H. Keyes 1998 956,250 826,000 -- 120,000 810,000 78,064
Chairman and Chief 1997 875,001 689,000 -- 120,000 730,000 67,714
Executive Officer 1996 787,503 575,000 -- 80,000 450,000 62,925
John Barth 1998 537,498 458,000 -- 60,000 299,000 42,791
President and Chief 1997 487,503 371,000 -- 48,000 277,000 34,966
Operating Officer 1996 441,249 260,000 -- 48,000 204,000 31,693
Stephen A. Roell 1998 373,752 270,000 -- 40,000 223,000 26,526
Senior Vice 1997 348,747 246,000 -- 34,000 202,000 26,643
President and 1996 324,999 188,000 -- 34,000 101,000 24,550
Chief Financial
Officer
Giovanni Fiori 1998 324,458 310,000 -- 24,000 138,000 --
Vice President 1997 301,359 197,000 -- 24,000 155,000 --
Automotive Systems 1996 290,505 207,000 -- 22,000 82,000 --
Group
Michael F. Johnston 1998 318,330 310,000 -- 24,000 118,000 23,913
Vice President 1997 266,253 203,000 -- 20,000 86,000 21,176
Automotive Systems 1996 234,249 190,000 -- 9,000 67,000 15,656
Group
</TABLE>

- -------------------------
(1) The aggregate amount of "Other Annual Compensation" which includes
perquisites and personal benefits was less than the required reporting
threshold (the lesser of $50,000 or 10% of the officer's annual salary and
bonus for the year).

(2) The Options/SAR's reflect the effects of the 2 for 1 stock split which took
place on March 31, 1997.

(3) "All Other Compensation" consists of contributions by the Company on behalf
of the named individuals to the Company's Savings and Investment plan.

15
<PAGE> 19

STOCK OPTIONS AND The following table lists our grants during 1998 of
STOCK APPRECIATION stock options and tandem SARs to the officers named in
RIGHT GRANTS: the Summary Compensation Table.

OPTIONS/SAR GRANTS IN FISCAL YEAR 1998

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------
% OF TOTAL POTENTIAL REALIZABLE
OPTIONS/SARS VALUE AT ASSUMED
GRANTED TO EXERCISE OR ANNUAL RATES OF STOCK
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRICE APPRECIATION FOR
NAME GRANTED FISCAL 1998 ($/SHARE) DATE FULL OPTION TERM
---- ------------ ------------ ----------- ---------- ----------------------
<S> <C> <C> <C> <C> <C>
James H. Keyes 120,000 10.09% $45.0938 11/19/07 $3,403,110/$8,624,148
John M. Barth 60,000 5.04% $45.0938 11/19/07 $1,701,555/$4,312,074
Stephen A. Roell 40,000 3.36% $45.0938 11/19/07 $1,134,370/$2,874,716
Giovanni Fiori 24,000 2.01% $45.0938 11/19/07 $680,622/$1,724,830
Michael F. Johnston 24,000 2.01% $45.0938 11/19/07 $680,622/$1,724,830
</TABLE>

The Company has an employee Stock Option Plan under
which options to purchase Common Stock and SARs are
granted to officers and other key employees of the
Company and its subsidiaries. The per share option/SAR
prices are the fair market value of the Company's
Common Stock on the date of the grant and the term of
the option is 10 years. Fifty percent of each award is
exercisable two years after the grant date and the
remainder is exercisable three years after the grant
date.

The amounts shown above as potential realizable values
rely on arbitrarily assumed rates of share price
appreciation prescribed by the SEC. In assessing those
values, please note that the ultimate value of the
options, as well as your shares, depends on actual
future share values. Market conditions and the efforts
of the directors, the officers and others to foster the
future success of our Company can influence those
future share values.

1998 OPTIONS, The table below lists the number of shares acquired and
SAR HOLDINGS AND the value realized as a result of option exercises
EXERCISES: during fiscal 1998 for the listed officers. It also
includes the number and value of their exercisable and
non-exercisable options and SARs as of September 30,
1998.

16
<PAGE> 20

AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTIONS/SAR VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES/SARS OPTIONS/SARS AT FY-END OPTIONS/SARS AT FY-END
ACQUIRED ON VALUE --------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------- ----------- ---------- --------------------------- -------------------------
<S> <C> <C> <C> <C>
James H. Keyes 0 0 344,000 / 280,000 $7,824,302 / $1,919,992
John M. Barth 26,021/ $ 816,032/ 0 / 132,000 0 / $ 903,370
17,979 $ 563,840
Stephen A. Roell 0 0 47,000 / 91,000 $ 907,403 / $ 636,215
Giovanni Fiori 0 0 57,000 / 59,000 $1,166,653 / $ 428,154
Michael F. Johnston 8000/ $ 206,905/ 0 / 53,000 $ 0 / $ 360,217
8000 $ 206,905
</TABLE>

LONG-TERM INCENTIVE As noted above in the Compensation Committee's report,
COMPENSATION: the Long-Term Performance Plan (LTPP) awards executives
for helping us achieve sustained performance goals and
encourages their continued efforts on our behalf.
Payouts of awards granted in fiscal 1998 are tied to
our Company's weighted average return on shareholders
equity for fiscal years 1999, 2000, and 2001 compared
with the median return on shareholder's equity of the
Standard & Poor's Manufacturers (Diversified
Industrial) Index (S&P Index) during the same
three-year period. To establish a weighted average,
performance in the third year of the award is
multiplied by 3/6, performance in the second year is
multiplied by 2/6, and performance in the first year is
multiplied by 1/6. If the Company's average level of
return is:

- Less than the 45th percentile of the return for
companies in the S&P Index, no award is earned;

- Equal or greater than the 45th percentile, the
threshold amount is earned;

- Equal to or greater than the 50th percentile, the
target amount is earned;

- Equal to or greater than the 55th percentile, 110% of
the target amount is earned; and

- Equal to or greater than the 60th percentile, the
maximum amount is earned.

In fiscal 1998, based upon the data available at this
time, LTPP participants were paid 100% available under
the criteria established by the Compensation Committee.
When the remaining comparison companies have reported,
these awards could increase, decrease or vary.

17
<PAGE> 21

LONG-TERM INCENTIVE PLANS -- AWARDS
IN FISCAL 1998

<TABLE>
<CAPTION>
AMOUNT OF PERFORMANCE
CONTINGENT PERIOD UNTIL
PERFORMANCE MATURATION OR THRESHOLD TARGET MAXIMUM
NAME AWARD($) PAYOUT ($) ($) ($)
---- ----------- ------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
James H. Keyes 810,000 1998-2000 648,000 810,000 972,000
John M. Barth 350,000 280,000 350,000 420,000
Stephen A. Roell 213,000 Fiscal Years 170,000 213,000 256,000
Michael F. Johnston 171,000 137,000 171,000 205,000
Giovanni Fiori 120,000 96,000 120,000 144,000
</TABLE>

RETIREMENT PLANS: The following table shows the maximum annual retirement
benefits payable under the Company's plans, including
amounts attributed to the Company's Equalization
Benefit Plan. Under the Johnson Controls Pension Plan
(the Plan), participants become entitled to benefits
after five years of service with the Company or any of
its subsidiaries, and the normal retirement date is a
participant's 65th birthday.

The Internal Revenue Code places maximum limitations on
the amount of benefits that may be paid under the Plan.
The Company has adopted an Equalization Benefit Plan
under which certain executives are entitled to pension
benefits that cannot be paid under the qualified plan
due to these limitations.

18
<PAGE> 22

PENSION PLAN TABLE*

<TABLE>
<CAPTION>
AVERAGE ANNUAL MAXIMUM ANNUAL PENSION AT NORMAL RETIREMENT AGE
COMPENSATION IN AFTER YEARS OF PARTICIPATING SERVICE
HIGHEST 5 CONSECUTIVE YEARS (PRIOR TO ADJUSTMENT FOR SOCIAL SECURITY COVERED COMPENSATION)
OF LAST 10 YEARS ----------------------------------------------------------------
BEFORE RETIREMENT 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- --------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
100,000 42,500 51,000 56,750 62,500
200,000 85,000 102,000 113,500 125,000
250,000 106,250 127,500 141,875 156,250
300,000 127,500 153,000 170,250 187,500
400,000 170,000 204,000 227,000 250,000
500,000 212,000 255,000 283,750 312,500
600,000 255,000 306,000 340,500 375,000
700,000 297,500 357,000 397,250 437,500
800,000 340,000 408,000 454,000 500,000
900,000 382,500 459,000 510,750 562,500
1,000,000 425,000 510,000 567,500 625,000
1,100,000 467,500 561,000 624,250 687,500
1,200,000 510,000 612,000 681,000 750,000
1,300,000 552,500 663,000 737,750 812,500
1,400,000 595,000 714,000 794,500 875,000
1,500,000 637,500 765,000 851,250 937,500
1,600,000 680,000 816,000 908,000 1,000,000
1,700,000 722,555 867,000 964,750 1,062,500
1,800,000 765,000 918,000 1,021,500 1,125,000
1,900,000 807,500 969,000 1,078,250 1,187,500
2,000,000 850,000 1,020,000 1,135,000 1,250,000
2,100,000 892,500 1,071,000 1,191,750 1,312,500
2,200,000 935,000 1,122,000 1,248,500 1,375,000
2,300,000 977,500 1,173,000 1,305,250 1,437,500
</TABLE>

- -------------------------
* assuming normal retirement age and years of service under provisions in effect
on September 30, 1998 and assuming retirement on that date

YEARS OF SERVICE: As of September 30, 1998, the persons named in the
Summary Compensation table were credited with the
following years of service under the Plan: Mr. Keyes,
29 years, Mr. Barth, 28 years, Mr. Roell 15 years, and
Mr. Johnston, 8 years. Mr. Fiori is not a participant
in the Plan.

BENEFITS ACCRUAL: Pension plans of the Company apply to all regular
employees, including officers of the Company. The Plan,
effective January 1, 1989, covers all salaried and non-
union hourly employees of the Company. Under the Plan,
benefits are accrued according to the following
formula: 1.15% of Participant's Average Monthly
Compensation multiplied by the Participant's years of
Benefit Service plus 0.55% of Average Monthly
Compensation in excess of the Participant's Covered
Compensation multiplied by the Participant's years of
Benefit Service. The amounts

19
<PAGE> 23
payable may be adjusted to reflect the Participant's
decision on survivor benefits, early retirement or
termination, and in some instances, age.

DEFINITIONS: "Average Monthly Compensation" is defined as the
average monthly compensation for the highest five
consecutive years in the last 10 years.

"Covered Compensation" means the average of
compensation subject to Social Security taxes for the
35-year period ending in the year the Participant
attains Social Security Retirement Age; i.e. the age at
which the Participant will be entitled to full Social
Security payments.

EMPLOYMENT AGREEMENTS

EMPLOYMENT We have employment agreements with each of the named
AGREEMENTS executive officers of the Company. These agreements
GENERALLY: provide that employment shall continue unless
terminated by either the Company or the employee. Such
agreements do not automatically extend after the
employee reaches age 65.

TERMINATION: The agreements provide for termination by the Company
for cause, for death or disability and under certain
circumstances without cause. If terminated without
cause, the employee is entitled to receive pay in an
amount equal to or greater than two times the Company's
termination allowance policy or an amount equal to 52
weeks' earnings of the employee. If terminated with
cause, the employee's compensation is terminated
immediately.

CHANGE OF CONTROL: We also have change of control agreements with each of
these officers. In the event of a change of control,
the agreements provide for a severance payment equal to
three times the executive's annual compensation plus a
lump sum payment equal to lost benefits under the
retirement plan if the executive is terminated other
than for cause or has a good reason to terminate
employment. If the amount paid upon termination exceeds
amounts established under the Internal Revenue Code,
which results in payment of additional federal taxes,
the executive will receive an additional payment so
that the executive will retain the full amount to which
he is entitled under the agreement. The executive also
has 30 days at the end of the first year after a change
of control to terminate his employment for any reason
and still receive this benefit.

The EICP provides that, in the event of a change of
control of our Company, certain participants, including
the named

20
<PAGE> 24
executive officers, may re-elect to receive early
payment of deferred amounts, and the participant may
direct the Company to cause a letter of credit to be
issued in an amount sufficient to provide for all
payments due to such participant under the Plan.

The LTPP also provides that, in the event of a change
of control of our Company, certain participants,
including the named executives, shall be entitled to
receive early payment of deferred amounts.

EXECUTIVE SURVIVOR The Company has in effect an Executive Survivor
BENEFITS PROGRAM: Benefits Plan for certain executives. Coverage under
this plan is in lieu of the Company's regular group
life insurance coverage. If a participating executive
dies while he is employed by the Company, his
beneficiary is entitled to payments of between 90% and
100% (depending on the executive's age) of the
executive's final base annual salary for a period of 10
years.

SELECTION OF INDEPENDENT AUDITORS FOR FISCAL YEAR 1999

We ask that you approve the appointment of
PricewaterhouseCoopers LLP as our independent auditors:

PricewaterhouseCoopers LLP, formerly known as Price
Waterhouse, has audited our accounts for many years.
The Board appointed them as independent auditors for
1999, upon recommendation of the Audit Committee. We
expect a representative of PricewaterhouseCoopers to
attend the meeting, respond to appropriate questions
and be given an opportunity to speak.

THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS AS JOHNSON CONTROLS' INDEPENDENT
AUDITORS FOR 1999.

COMPENSATION PLANS SUBJECT TO SHAREHOLDER APPROVAL

BACKGROUND: As discussed above in the "Compensation Committee
Report," the Executive Incentive Compensation Plan
(EICP) and the Long Term Performance Plan (LTPP) are
important means by which the Company ties the major
part of executive officers' compensation to the
performance of the Company. Since the approval of the
EICP and LTPP by the Company's shareholders in 1995,
the EICP and LTPP have provided strong motivation to
executives to achieve performance objectives that the
Compensation Committee has set and have placed strong
emphasis on the building of value for all shareholders.

21
<PAGE> 25

The Board of Directors has concluded that, to ensure
that the EICP and LTPP will fulfill their purposes in
the future, the shareholders should approve certain
amendments to the EICP and LTPP that the Board adopted,
and the shareholders should reapprove the EICP and LTPP
as a whole. Shareholder approval of the amendments to
the EICP and LTPP and reapproval of the EICP and LTPP
is required for these plans to comply with IRS rules
regarding deductibility of compensation. Once approved,
these plans must be reapproved by the shareholders
every five years. Separate proposals with respect to
the ratification of the LTPP and the EICP are set forth
below.

Certain awards have been made under the proposed LTPP
for Fiscal 1999 contingent on shareholder approval at
the 1999 Annual Meeting. Shareholder approval is
required to qualify the payments for deductibility
under IRS rules. Since the awards depend on base pay on
September 30, 2001, the amounts to be paid are not
determinable.

Certain formula awards have been made under the
proposed EICP for Fiscal 1999 contingent on shareholder
approval at the 1999 Annual Meeting. Shareholder
approval is required to qualify for deductibility under
IRS rules. The awards will depend on base pay on
September 30, 1999. Because the formula awards can be
reduced dependent on an individual's performance and
attainment of objectives over the past year, the
amounts to be paid are not determinable.

RATIFICATION OF LONG TERM PERFORMANCE PLAN

MATERIAL The Board has adopted the following material amendments
AMENDMENTS: to the LTPP:

- The term of the LTPP has been extended until
September 30, 2003. The LTPP was scheduled to expire
on September 30, 1999.

- The maximum amount that can be paid under the LTPP in
one year to any executive with respect to any three-
year performance period will be $3 million. The
maximum amount was previously 100 percent of the
executive's base salary.

- Performance awards under the LTPP will be based on
the executive's annual rate of base pay in effect on
the last day of a performance period (rather than
base pay in effect at the beginning of the
performance period).

22
<PAGE> 26

The Board has also adopted other amendments to the
LTPP. You should read the copy of the LTPP included as
Exhibit A to this proxy statement.

KEY TERMS OF THE All executive officers participate in the LTPP, subject
LTPP to approval of the Compensation Committee.

For each three-year performance period, the
Compensation Committee determines within the first 90
days of the period and communicates to the executive
the formula for the award, which is based on specified
benchmarks for return on shareholders' equity over a
three-year period. The benchmarks are determined by the
Compensation Committee each year and are adjusted based
on the previous year's performance. At the end of the
three-year performance period, the Compensation
Committee applies the formula to objective performance
results to determine an executive's award. No amounts
in excess of $3 million may be paid to any one
executive for any performance period.

An executive may elect to have all or part of the award
deferred and credited to one of the following accounts:

- Share Unit Account: The amount of the award is
converted to a number of share units. Each share unit
has a value equal to the value of a share of the
Common Stock. The award is converted at the market
value as of the day on which cash payment of the
award would have been made. Dividends on shares of
Common Stock are credited to the Share Unit Account
and adjustments are made for stock splits. Payouts
from the Share Unit Account are made in cash based
upon the value of the Common Stock at that time.

- Interest Account: The amount of the award is
increased annually based on the prime rate in effect
at Firstar Bank.

- Equity Fund Account: The amount of the award is
treated as if it had been invested as part of the
Equity Fund under the Johnson Controls Savings and
Investment Plan and will be periodically credited or
debited with an amount equal to the gain or loss in
value which would have been realized on an amount
equal to the unpaid balance of the Equity Fund
Account as if it had been invested in the Equity
Fund.

Upon termination of employment, the amounts in the
accounts will be paid in approximately ten equal annual
installments. Lump-sum payments may also be made upon a
change in control of the Company as defined.

23
<PAGE> 27

The LTPP terminates on September 30, 2003. The
Compensation Committee may amend the LTPP, subject to
IRS regulations that require shareholder approval of
amendments.

THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE
RATIFICATION OF THE LONG TERM PERFORMANCE PLAN.

RATIFICATION OF THE EXECUTIVE INCENTIVE COMPENSATION PLAN

MATERIAL The Board has adopted the following material amendments
AMENDMENTS: to the EICP:

- The maximum amount that can be paid under the EICP to
any executive with respect to any year has been
increased from $1 million to $2.5 million.

- Awards under the EICP will be based on the
executive's compensation as in effect on the last day
of the plan year (rather than that in effect at the
beginning of the plan year).

The Board has also adopted other amendments to the
EICP. You should read the copy of the EICP included as
Exhibit B to this proxy statement.

KEY TERMS OF THE All executive officers participate in the EICP, subject
EICP to approval of the Compensation Committee.

For each plan year, the Compensation Committee
determines within the first 90 days of the year and
communicates to the executive the formula for the
award, which is based on specified benchmarks for
return on shareholders' equity, return on group assets
or growth in operating profits. The benchmarks are
determined by the Compensation Committee each year and
are adjusted based on the previous year's performance.
At the end of the plan year, the Compensation Committee
applies the formula to objective performance results to
determine an executive's award. No amounts in excess of
$2.5 million may be paid to any one executive for any
plan year.

An executive who does not elect to defer payment will
receive payment between the 60th and the 75th day after
the end of the plan year. An Executive may elect to
have all or part of the award deferred and credited to
one of the following accounts:

24
<PAGE> 28
would have been made. Dividends on shares of Common
Stock are credited to the Share Unit Account and
adjustments are made for stock splits. Payouts from the
Share Unit Account are made in cash based upon the
value of the Common Stock at that time.

- Interest Account: The amount of the award is
increased annually based on the prime rate in effect
at Firstar Bank.

- Equity Fund Account: The amount of the award is
treated as if it had been invested as part of the
Equity Fund under the Johnson Controls Savings and
Investment Plan and will be credited or debited with
an amount equal to the gain or loss in value that
would have been realized on an amount equal to the
unpaid balance of the Equity Fund Account as if it
had been invested in the Equity Fund.

The Compensation Committee may amend the EICP, subject
to IRS regulations that require shareholder approval of
amendments.

THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE
RATIFICATION OF THE EXECUTIVE INCENTIVE COMPENSATION
PLAN.

JOHNSON CONTROLS SHARE OWNERSHIP

DIRECTORS AND
OFFICERS: The following table lists our Common Stock ownership as
of October 31, 1998, for the persons or groups
specified. Ownership includes direct and indirect
(beneficial) ownership, as defined by SEC rules. To our
knowledge, each person, along with his or her spouse,
has sole voting and investment power over the shares
unless otherwise noted. None of these persons
beneficially owns more than 1% of the outstanding
Common Stock.

25
<PAGE> 29

<TABLE>
<CAPTION>
AMOUNT AND UNITS REPRESENTING
NATURE(1) OF STOCK DEFERRED
NAME OF BENEFICIAL OWNER OWNERSHIP COMPENSATION(3)
- ------------------------ ------------------ ------------------
<S> <C> <C>
James H. Keyes 507,453(2) 57,841 units
John M. Barth 100,870(2) 17,834 units
Stephen A. Roell 112,887(2) 2,702 units
Michael F. Johnston 31,545(2) 4,817 units
Giovanni Fiori 82,050(2) 5,983 units
William F. Andrews 5,878 0 units
Robert Barnett 3,008 17,658 units
Paul A. Brunner 12,965 0 units
Robert A. Cornog 5,054 4,415 units
Willie D. Davis 3,365 0 units
William H. Lacy 1,500 1,038 units
Southwood J. Morcott 2,188 4,084 units
Richard F. Teerlink 3,421 0 units
Gilbert R. Whitaker, Jr. 5,415 6,117 units
All Directors and Executive Officers as a
group (not including deferred shares
referred to in footnote (3) Total: 1,537,753(2)
TOTAL PERCENT OF CLASS OF COMMON STOCK
EQUIVALENTS 1.7%
</TABLE>

- -------------------------
(1) Includes all shares for each officer or director which directly has or
shares the power to vote or to direct the vote of such shares, or to dispose
of or direct disposition of such shares.

(2) Includes shares of Common Stock, which, as of October 31, 1998, were subject
to outstanding stock options exercisable within 60 days as follows: Mr.
Keyes, 444,000, Mr. Barth, 48,000, Mr. Roell, 81,000, Mr. Fiori, 80,000 and
Mr. Johnston 19,000. This also reflects common stock equivalents of
Preferred Units that are owned by these officers.

(3) Includes deferred shares under the EICP, LTPP, and Deferred Compensation
Plan for certain Directors. Units will not be distributed in the form of
Common Stock.

SCHEDULE 13G FILINGS: The Company believes that following table is an
accurate representation of beneficial owners of more
than 5% of any class of the Company's securities. The
table is based upon reports on Schedules 13G filed with
the Securities and Exchange Commission or other
information believed to be reliable.

26
<PAGE> 30

<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF NATURE PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER OF OWNERSHIP CLASS
-------------- --------------------------- ----------------- ----------------
<S> <C> <C> <C>
Series D Convertible Fidelity Management 273.273(1) 100%
Preferred Stock Trust Company
$1.00 Par Value 82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>

- -------------------------
(1) As of October 31, 1998, Fidelity Management Trust Company reported that it
held shared voting power and sole dispositive power with respect to the
shares indicated above in its capability as trustee of the Johnson Controls,
Inc. Employee Stock Ownership Trust.

VOTING PROCEDURES

ELECTION OF DIRECTORS: To be elected, directors must receive a plurality of
the shares present and voting in person or by proxy,
provided a quorum exists. A quorum is present if at
least a majority of the outstanding shares on the
record date are present in person or by proxy.
Plurality means that the number of directors who
receive the largest number of votes cast are elected as
directors up to the maximum number of directors to be
chosen at the meeting. Consequently, any shares not
voted (whether by abstention, broker nonvote or
otherwise) have no impact in the election of directors
except to the extent the failure to vote for an
individual results in another individual receiving a
larger number of votes.

OTHER PROPOSALS: To be approved, each of the proposals (1) to ratify the
election of PricewaterhouseCoopers LLP as our
independent auditors for 1999, (2) to ratify the LTPP
and (3) to ratify the EICP must receive more votes
"FOR" the proposal than "AGAINST". For purposes of
determining the vote with respect to these proposals,
any shares not voted (whether by abstention, broker
nonvote or otherwise) will have no impact.

The enclosed proxies will be voted in accordance with
the instructions you place on the proxy card. Unless
otherwise stated, all shares represented by your
returned, signed proxy will be voted for management
proposals as noted on the first page of this proxy
statement. Proxies may be revoked as noted on that
page.

27
<PAGE> 31

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based on a review of reports filed by our directors,
executive officers and of beneficial holders of 5% or
more of our shares, and upon representations from those
persons, all reports required to be filed during 1998
with the Securities and Exchange Commission under
Section 16(a) of the Securities Exchange Act of 1934
were timely made.

SUBMISSION OF SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS

SHAREHOLDER Proposals of shareholders which are intended to be
PROPOSALS: presented at the 2000 annual meeting pursuant to SEC
Rule 14a-8, must be received by the Company no later
than August 6, 1999 to be included in the Company's
proxy materials for that meeting.

A shareholder that intends to present business at the
2000 Annual Meeting other than pursuant to Rule 14a-8
must comply with the requirements set forth in the
Company's By-Laws. Among other things, to bring
business before an annual meeting, a shareholder must
give written notice thereof, complying with the
By-Laws, to the Secretary of the Company not less than
45 days and not more than 75 days prior to the month
and day in the current year corresponding to the date
on which the Corporation first mailed its proxy
materials for the prior year's annual meeting of
shareholders. Therefore, since the Company anticipates
mailing its proxy statement on December 4, 1998, the
Company must receive notice of a shareholder proposal
submitted other than pursuant to Rule 14a-8 no sooner
than September 20, 1999, and no later than October 20,
1999.

If the notice is received after October 20, 1999, then
the notice will be considered untimely and the Company
is not required to present such proposal at the 2000
Annual Meeting. If the Board of Directors chooses to
present a proposal submitted after October 20, 1999 at
the 2000 Annual Meeting, then the persons named in
proxies solicited by the Board of Directors for the
2000 Annual Meeting may exercise discretionary voting
power with respect to such proposal.

DIRECTOR NOMINATIONS: Shareholders wishing to propose direct candidates for
consideration by the Directors Committee may do so by
writing to the Secretary of the Company, giving the
candidate's name, biographical data and qualifications.
The Company's by-Laws set forth additional requirements
for shareholders wishing to nominate director
candidates for

28
<PAGE> 32
consideration by shareholders. For elections of
directors at an annual meeting, the requirement include
written notice by the shareholder of an intent to make
such a nomination that complies with the By-Laws to the
Secretary of the Company not less than 45 days and not
more than 75 days prior to the month and day in the
current year corresponding to the date on which the
Company first mailed its proxy materials for the prior
year's meeting of shareholders.

By order of the Board of Directors.

JOHN P. KENNEDY
John P. Kennedy, Secretary
December 4, 1998

[MAP]

NOTE: NEW LOCATION FOR ANNUAL MEETING

29
<PAGE> 33

EXHIBIT A

JOHNSON CONTROLS, INC.
LONG TERM PERFORMANCE PLAN

(AS AMENDED AND RESTATED EFFECTIVE OCTOBER 1, 1998)
<PAGE> 34

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PURPOSE............................................................................ 1
ARTICLE II. EFFECTIVE DATE AND TERMINATE DATE.......................... 1
Section 2.01. Effective Date........................................... 1
Section 2.02. Termination Date......................................... 1
ARTICLE III. DEFINITIONS................................................ 1
ARTICLE IV. ELIGIBILITY................................................ 2
ARTICLE V. ADMINISTRATION............................................. 2
Section 5.01. Amendment or Termination................................. 2
Section 5.02. The Committee............................................ 2
Section 5.03. Committee Authority...................................... 2
ARTICLE VI. ASSIGNMENT OF CONTINGENT PERFORMANCE AWARDS................ 3
Section 6.01. Assignments.............................................. 3
Section 6.02. Shareholder Approval Requirements........................ 3
Section 6.03. New Hired and Transferred Employees...................... 3
ARTICLE VII. PERFORMANCE GOALS.......................................... 3
Section 7.01. Criterion for Measuring Performance...................... 3
Section 7.02. Establishment of ROE Performance Goals................... 3
ARTICLE VIII. PAYMENT.................................................... 3
Section 8.01. Evaluating Performance and Computing Awards.............. 3
Section 8.02. Computing Awards......................................... 4
Section 8.03. Timing and Form of Payment............................... 4
Section 8.04. Distribution Upon Termination of Employment.............. 6
Section 8.05. Change of Control........................................ 7
Section 8.06. Distribution in Event of Financial Emergency and
Acceleration of Payments................................. 9
ARTICLE IX. TERMINATION................................................ 9
Section 9.01. Termination for Death or Disability...................... 9
Section 9.02. Termination for Normal Retirement........................ 9
Section 9.03. Termination for Other Reasons............................ 10
ARTICLE X. ADJUSTMENTS................................................ 10
ARTICLE XI. OTHER CONSIDERATIONS....................................... 10
Section 11.01. Beneficiary Designation.................................. 10
Section 11.02. Dissolution or Merger.................................... 10
Section 11.03. Claim to Performance Awards and Employment Rights........ 11
Section 11.04. Nontransferability....................................... 11
Section 11.05. Tax Withholding.......................................... 11
Section 11.06. Administrative Expenses.................................. 11
Section 11.07. Governing Law............................................ 11
Section 11.08. Gender and Number........................................ 11
</TABLE>

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<PAGE> 35

ARTICLE I. PURPOSE

The purpose of this Plan is to motivate top executives to achieve longer
term objectives which will result in long term increased value to the
shareholders of the Company.

ARTICLE II. EFFECTIVE DATE AND TERMINATE DATE

Section 2.01. Effective Date. The Plan shall be effective as of October 1,
1987.

Section 2.02. Termination Date. The Plan shall terminate with respect to
the assignment of contingent Performance Awards on September 30, 2003; provided,
however, that the Committee may terminate the Plan or the assignment of
contingent Performance Awards at any time prior to that date. Termination of the
Plan shall not cancel, reduce or otherwise impair the rights of Participants to
receive any contingent Performance Awards assigned prior to termination of the
Plan.

ARTICLE III. DEFINITIONS

Section 3.01. The "Company" is Johnson Controls, Inc., a Wisconsin
corporation, and any successor thereto that adopts the Plan.

Section 3.02. The "Plan" is the Johnson Controls, Inc. Long Term
Performance Plan adopted on September 23, 1987 as from time amended and in
effect.

Section 3.03. The "Board" is the Board of Directors of the Company.

Section 3.04. The "Committee" means the Compensation Committee of the
Board, which shall consist of not less than two (2) members of the Board each of
whom is a "non-employee director" as defined in Securities and Exchange
Commission Rule 16b-3(b)(3), or as such term may be defined in any successor
regulation under Section 16 of the Securities Exchange Act of 1934, as amended.
In addition, each member of the Committee shall be an outside director within
the meaning of Section 162(m) of the Internal Revenue Code.

Section 3.05. A "Participant" is an executive of the Company or a
subsidiary who has been approved for participation in the Plan.

Section 3.06. The "Base Salary" of a Participant is the annual rate of base
pay in effect for such Participant as of the last day of the Performance Period
(or such other date as the Committee may specify by action taken within 90 days
after the beginning of the Performance Period).

Section 3.07. The "Beneficiary" is the person or persons entitled to
receive any amounts due to a Participant in the event of the Participant's
death.

Section 3.08. "Income" is consolidated income before income taxes, as
stated in the Consolidated Statement of Income in the Company's Annual Report.
<PAGE> 36

Section 3.09. "Shareholders' Equity" for a fiscal year is calculated for
purposes hereunder by taking the arithmetic average of consolidated
shareholders' equity of the Company, as set forth in the Consolidated Statement
of Financial Position in the Company's Quarterly and Annual Reports to
shareholders, over five points in time, which shall include the end of the
preceding year and the end of each quarter of the current fiscal year.

Section 3.10. "Return on Shareholders' Equity (ROE)" is the percentage
relationship of Income to Shareholders' Equity for each fiscal year.

Section 3.11. "Earnings Per Share (EPS)" is Company net income per share of
Common Stock, on a fully diluted basis, as reported in the Company's Annual
Report to Shareholders.

Section 3.12. "Performance Award" is an amount whose final value will be
earned and paid to a Participant if certain predetermined requirements are met.

Section 3.13. "Performance Period" is a period of three successive fiscal
years, as determined by the Committee, with respect to which an assignment of
Performance Awards is made pursuant to this Plan.

ARTICLE IV. ELIGIBILITY

Only officers and other key executives of the Company who have a
significant influence upon the long-term performance of the Company will be
eligible to participate in the Plan. Participation in one award, however, will
not automatically guarantee participation in subsequent years. Participation for
each award under the Plan will be approved by the Committee after consultation
with the Chief Executive Officer.

ARTICLE V. ADMINISTRATION

Section 5.01. Amendment or Termination. The Committee may modify or amend,
in whole or in part, any or all of the provisions of the Plan, except as to
those terms or provisions that are required by Section 162(m) of the Internal
Revenue Code to be approved by the shareholders, or suspend or terminate the
Plan entirely; provided, however, that no such modification, amendment,
suspension or termination may, without the consent of the Participant or his or
her Beneficiary in the case of his or her death, reduce the right of a
Participant, or his or her beneficiary, as the case may be, to any payment due
under the Plan.

Section 5.02. The Committee. The Plan shall be administered by the
Committee.

Section 5.03. Committee Authority. Except as otherwise specifically
provided by the Plan, the Committee shall have full and exclusive authority to
execute the responsibilities given to it by the Plan. Any determinations,
rulings, or interpretations made by the Committee shall be final and binding on
all persons, including the Company, shareholders of the Company, Participants,
and other employees. The Committee may make such reasonable rules and
regulations concerning the

2
<PAGE> 37

administration of the Plan as it deems necessary or appropriate. In its
administration of the Plan, the Committee shall apply such rules and regulations
and shall otherwise interpret the provisions of the Plan in a reasonable and
consistent manner.

ARTICLE VI. ASSIGNMENT OF CONTINGENT PERFORMANCE AWARDS

Section 6.01. Assignments. The Committee shall assign to each Participant a
contingent Performance Award (expressed as a percentage of the Participant's
Base Salary) that it deems appropriate prior to the commencement of the
Performance Period to which the Performance Award applies, or within 90 days
following the beginning of such Performance Period.

Section 6.02. Shareholder Approval Requirements. The Committee, in its
discretion, may make all or any portion of the assignment of awards contingent
upon receiving subsequent shareholder approval sufficient to qualify payment
thereunder as deductible for the Corporation. The Committee may take such action
without the consent of participants.

Section 6.03. New Hired and Transferred Employees. Notwithstanding anything
to the contrary herein, in the case of a person who is newly hired into an
eligible position or transferred into an eligible position after the beginning
of a Performance Period, the Committee may at any time grant a contingent
Performance Award, and fix the terms of any such award, whether or not such
action qualifies for the performance-based exception under Section 162(m) of the
Code.

ARTICLE VII. PERFORMANCE GOALS

Section 7.01. Criterion for Measuring Performance. The criteria to be used
to measure the financial performance of the Company shall be its Return on
Equity (ROE). The Company's Return on Equity shall be compared to performance
goals as established in Section 7.02.

Section 7.02. Establishment of ROE Performance Goals. The Committee shall
establish performance goals prior to, or within 90 days after the beginning of,
each Performance Period and set those goals forth in its meeting minutes.

ARTICLE VIII. PAYMENT

Section 8.01. Evaluating Performance and Computing Awards. As soon as
practicable following the close of the Performance Period, the Company shall
determine the award amount applicable to that Performance Period, provided that
the maximum award amount for any Participant with respect to any Performance
Period shall be three million dollars ($3,000,000). All awards are subject to
certification in writing by the Committee prior to payment that the performance
goals and other material terms of the Plan were in fact satisfied.

3
<PAGE> 38

Section 8.02. Computing Awards. Award amounts will be calculated from a
table which will be issued to each participant at the time of grant.

Section 8.03. Timing and Form of Payment.

(a) When the payment due to the Participant has been determined as
aforesaid, unless otherwise deferred in accordance with Sections 8.03(b) or (c)
or to be paid on a current basis in accordance with Section 8.03(d), the payment
due the participant shall be credited to a bookkeeping reserve account which
shall be established for the Participant and set up the books of the Company and
known as his "Interest Account". The unpaid balance in the Interest Account
shall be credited with a simple annual interest equivalent as follows: As of
January 1 next following the close of the Performance Period for which the
deferred award was made, such award shall become part of the unpaid balance of
such Interest Account. Such Interest Account shall be credited on December 31 of
each year with an amount equal to interest on the unpaid balance of such account
from time to time outstanding during the year ending on such December 31 at the
rate determined by adding together the prime rate in effect at the Firstar Bank
Milwaukee, N.A. (or any successor thereto) on the last banking day prior to the
beginning of such year and the prime rate in effect at said bank on the last
banking day of each of the calendar months of January through November of such
year and dividing such total by 12. In the event the Interest Account shall be
terminated for any reason prior to December 31 of any year, such account shall
upon such termination date be credited with an amount equal to interest at the
average prime rate determined as aforesaid on the unpaid balance from time to
time outstanding during that portion of such year prior to the date of
termination.

(b) A Participant may elect that part or all of the payment due be
converted to "Share Units", as provided below, and credited to a bookkeeping
reserve account which shall be established for the Participant and set upon on
the books of the Company and known as his "Share Unit Account". The term "Share
Unit" means a measure of participation under the Plan having a value based on
the market value or a share of the common stock of the Company and other
characteristics specified herein. When a participant has elected to have a part
or all of his award under the Plan converted to Share Units, it shall be
converted between the 60th and 75th day immediately after the close of the
Performance Period. Any other provision of this Plan to the contrary
notwithstanding, the aggregate number of Share Units to be awarded under this
Plan shall not exceed two (2) percent of the number of issued and outstanding
shares of the Common Stock of the Company. Each award shall be converted into
Share Units in the following manner:

(i) Determine the market value of a share of the common stock of the
Company. The market value shall be the closing price on the New York Stock
Exchange on the day in question, or the day of the last previous sale, if
there shall not be any sale on the day in question.

(ii) Divide the award by such market value.

(iii) The quotient resulting from such division indicates the Share
Units to be credited. Whenever the Company declares a dividend on its
common stock,

4
<PAGE> 39
in cash or in property, at a time when Participants have Share Units
credited to their accounts in the Plan, a dividend award shall be made to
all Participants as of the date of payment of the dividend. The dividend
award for a Participant shall be determined by multiplying the Share Units
credited to a Participant's account on the date of payment by the amount of
the dividend paid on each share of common stock. The dividend award shall
be converted into Share Units in the same manner that an award is converted
into Share Units. In making this conversion, the market value of a share of
the common stock of the Company shall be determined as of the date the
dividend on the common stock is paid.

(c) A Participant may also elect to have part or all of the payment due
credited to a bookkeeping reserve account which shall be established for the
Participant and set up on the books of the Company and known as his "Equity Fund
Account". When a Participant has elected to have a part or all of his award
credited to an Equity Fund Account, the unpaid balance in such account shall be
credited or debited with an annual investment return equivalent as follows: As
of the date on which an award would be payable in cash immediately following the
close of each Performance Period for which an award was made, such award shall
become part of the unpaid balance of such Equity Fund Account. Such Equity Fund
Account shall be treated as if it had been invested as an integral part of the
Equity Fund (or such other fund designated by the Committee) under the Johnson
Controls Savings and Investment Plan and shall be credited or debited as of the
last day of each fiscal year with an amount equal to the net gain or loss in
value, as the case may be, which would have been realized on an amount equal to
the unpaid balance of such Equity Fund Account if it had been invested in such
Equity Fund throughout such fiscal year. In the event that the Equity Fund
Account shall be terminated for any reason prior to September 30, of any year,
such account shall upon such termination date be credited or debited with an
amount equal to the net gain or loss in value which would have been realized on
an amount equal to the unpaid balance of such Equity Fund Account if it had been
invested in such Equity Fund during the part of such fiscal year commencing on
the first day thereof and ending on the date of termination of such account.

(d) A Participant may also elect, subject to the approval of the Committee,
that part or all of the payment due to such Participant with respect to any
Performance Period shall be paid to him on a current (rather than a deferred
basis). For any Performance Period for which a Participant elects payment on a
current basis, the payment due shall be paid to the Participant, in the sole
discretion of the Committee, in a lump sum, or in installments (which need not
be equal) commencing in the first quarter following the close of the Performance
Period, over a period not to exceed five years.

(e) An election under Sections 8.03(b), (c), or (d) with respect to any
Performance Period must be filed in writing with the Committee not later than
the last day of the second fiscal year in such Performance Period. Any such
election shall be irrevocable. Any Participant may file with the Committee a
written waiver of his right to elect payment on a current basis pursuant to
Section 8.03(d). Such

5
<PAGE> 40

waiver may be filed at any time so long as the Participant has not previously
filed an election under Section 8.03(d). Any such waiver shall be irrevocable.

(f) A Participant may also irrevocably elect, one each year and effective
on the next date on which conversions are made under paragraph 8.03(b), to
convert all or part of an Interest Account or an Equity Fund Account to the
Participant's Share Unit Account. Such conversions shall be made in the same
manner as set forth in paragraph 8.03(b), as if the amount for which an election
was made was an award being made effective on that date.

Section 8.04. Distribution Upon Termination of Employment. Upon termination
of a Participant's employment with the Company or subsidiary for any reason, the
Participant, or his/her Beneficiary in the event of his/her death, shall be
entitled to receive the amounts accumulated in such Participant's Interest
Account, Share Unit Account and/or Equity Fund Account, as the case may be, in
ten approximately equal annual installment payments as hereinafter provided.

(a) The amounts in the Interest Account and/or the Equity Fund Account
shall be paid in cash as follows:

(i) The first annual payment shall be made no earlier than the
fifteenth day of the first quarter of the calendar year following the date
of termination of employment, and shall be in an amount equal to the value
of 1/10th of the total amount credited to the Participant's Interest
Account and/or Equity Fund Account as of January 1 next following the date
of termination.

(iii) Each succeeding installment payment shall be determined in a
similar manner, i.e., the fraction of the Participant's Interest Account
and/or Equity Fund Account balance to be paid out shall increase each year
to 1/8th, 1/7th, etc., until the tenth installment which shall equal the
then remaining balance of the account.

(b) The amounts in the Share Unit Account shall be paid in cash as follows:

(i) The first annual payment shall be made no earlier than the
fifteenth day of the first quarter of the calendar year following the date
of termination of employment, and shall be in an amount equal to the value
of 1/10th of the number of Share Units credited to the Participant's
account as of the date of termination of employment. The value of each
Share shall be determined by multiplying the market value of a share of
common stock of the Company on the date of termination of employment by the
number of such Share Units. Payment shall be made by the Company in cash.
After the amount of the first installment has been determined, 1/10th of
the Share Units credited to the

6
<PAGE> 41
Participant's account on the date of termination of employment shall be
cancelled as of the date of termination of employment.

(ii) A second annual payment shall be made no earlier than the
fifteenth day of the first quarter of the calendar year following the year
during which the first anniversary of the date of termination of employment
occurs, and shall be in an amount equal to the value of 1/9th of the number
of Share Units credited to the Participant's account as of the first
anniversary of the date of termination of employment. The value of such
Share Units shall be determined by multiplying the market value of a share
of the common stock of the Company on the first anniversary of the date of
termination of employment by the number of such Share Units. Payment shall
be made by the Company in cash. After the amount of the second installment
has been determined, 1/9th of the Share Units credited to the account of
the Participant on the first anniversary of the date of termination of
employment shall be cancelled as of the first anniversary of the date of
termination of employment.

(iii) Each succeeding installment payment shall be determined in a
similar manner and Share Units shall be cancelled in a similar manner, the
tenth annual installment being an amount equal to the value of the total
number of Share Units credited to the account of the Participant on the
ninth anniversary of the date of termination of employment.

Section 8.05. Change of Control. Notwithstanding any other provision of
this Plan, within 30 days of a Change of Control (as defined below), each
participant shall be entitled to receive a lump sum payment in cash equal to the
product of (x) such participant's formula award for the year in which the Change
of Control occurs, based on maximum achievable award for such Participant under
the Plan and (y) a fraction, the numerator of which is the number of days after
January 1 in the year in which the Change of Control occurs and the denominator
of which is 365. In addition, the Company shall pay to each Participant a lump
sum amount in cash within 30 days of the Change of Control all amounts
accumulated in such Participant's Interest, Share Unit and Equity Fund Account
under the Plan. In determining the amount accumulated in a Participant's Share
Unit Account, each Share Unit shall have a value equal to the higher of (x) the
highest reported sales price, regular way, of a share of the Company's common
stock on the Composite Tape for New York Stock Exchange Listed Stocks (the
"Composite Tape") during the sixty-day period prior to the date of Change of
Control of the Company and (y) if the Change of Control of the Company is the
result of a transaction or series of transactions described in paragraphs (a) or
(c) of the definition of Change of Control of the Company set forth below, the
highest price per share of common stock of the Company paid in such transaction
or series of transactions. A Change of Control means any of the following
events:

(a) The acquisition, other than from the Company, by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial

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<PAGE> 42

ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either:

(i) The then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or

(ii) The combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Company Voting Securities"), provided, however, that any
acquisition by (x) the Company or any of its subsidiaries, or any employee
benefit plan (or related trust) sponsored or maintained by the Company or
any of its subsidiaries or (y) any corporation with respect to which,
following such acquisition, more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Company Voting Securities
immediately prior to such acquisition in substantially the same proportion
as their ownership, immediately prior to such acquisition, of the
Outstanding Company Common Stock and Company Voting Securities, as the case
may be, shall not constitute a Change in Control of the Company; or

(b) Individuals who, as of May 24, 1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to May 24,
1989 whose election or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or

(c) Approval by the shareholders of the Company of a reorganization, merger
or consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be; or

(d) A complete liquidation or dissolution of the Company or sale or other
disposition of all or substantially all of the assets of the Company other than
to a

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<PAGE> 43

corporation with respect to which, following such sale or disposition, more than
60% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entitles who were
the beneficial owners, respectively, of the outstanding Company Common Stock and
Company Voting Securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the Outstanding Company
Common Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition.

Section 8.06. Distribution in Event of Financial Emergency and Acceleration
of Payments. The Committee may in its sole discretion elect to make or
accelerate payments of the amounts remaining in the Participant's Interest,
Share Unit or Equity Fund Accounts either prior to termination of employment or
thereafter if the unpaid balance at any time is less than $50,000, or in the
event the Committee determines that financial emergency has occurred in the
personal affairs of the Participant or his Beneficiary in case of his death. If
requested by a Participant while in the employ of the Company or a subsidiary
and the Committee determines that a financial emergency has occurred in the
financial affairs of the Participant, the Interest, Share Unit and/or Equity
Fund Accounts of the Participant on the date the Participant makes the request
may be paid out at the sole discretion of the Committee in the same manner they
would have paid out had the Participant terminated his employment with the
Company or subsidiary on the date of such request. In the event of a payout due
to financial emergency, a second Interest, Share Unit and Equity Fund Account
shall be established for the participant and any wards made to the Participant
thereafter shall be credited to such second Interest, Share Unit or Equity Fund
Account. The Participant's rights to the second Interest, Share Unit of Equity
Fund Account shall be the same as his rights to the initial Interest, Share Unit
or Equity Fund Account.

ARTICLE IX. TERMINATION

Section 9.01. Termination for Death or Disability. If a Participant's
employment is terminated during a Performance Period by reason of death or
disability, payments shall be determined and paid under Section 8, as if the
fiscal year during which termination takes place is the last fiscal year of the
particular Performance Period.

Section 9.02. Termination for Normal Retirement. If a Participant's
employment is terminated during a Performance Period by reason of normal
retirement, payments shall be determined and paid under Section 8 as if the
fiscal year during which such termination takes place is the last fiscal year of
the particular Performance Period. However, before such determination is made,
the Performance Award for such Performance Period shall, as of the date of
normal retirement, be reduced to a number calculated by multiplying the
Performance Award by a fraction. The numerator of the fraction shall be the
number of full months during which the Participant was an employee of the
Company during the

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<PAGE> 44

Performance Period and the denominator of which is the number of full months the
Performance Period would have lasted had the normal retirement not occurred.

Section 9.03. Termination for Other Reasons. The Committee shall have the
discretion to cancel an award if the Participant's employment is terminated
during a Performance Period for any reason other than death, total and permanent
disability, or normal retirement.

ARTICLE X. ADJUSTMENTS

In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, reclassification,
merger, consolidation or exchange of shares or other similar corporate change,
then if the Committee shall determine, in its sole discretion, that such change
necessarily or equitably requires an adjustment in the Performance Awards or
Share Units then held by Participants, such adjustments shall be made by the
Committee and shall be conclusive and binding for all purposes of this Plan. No
adjustment shall be made in connection with the issuance by the Company of any
warrants, rights, or options to acquire additional shares of Common Stock or of
securities convertible into Common Stock.

ARTICLE XI. OTHER CONSIDERATIONS

Section 11.01. Beneficiary Designation. A Participant may designate a
Beneficiary or Beneficiaries who, upon the Participant's death, are to receive
the distributions that otherwise would have been paid to the Participant. All
designations shall be in writing and shall be effective only if and when
delivered to the Committee during the lifetime of the Participants. If a
Participant designates a Beneficiary without providing in the designation that
the Beneficiary must be living at the time of each distribution, the designation
shall vest in the Beneficiary all of the distributions whether payable before or
after the Beneficiary's death, and any distribution remaining upon the
Beneficiary's death shall be made to the Beneficiary's estate. A participant may
from time to time during his lifetime change his Beneficiary by a written
instrument delivered to the Secretary of the Company. In the event a Participant
shall not designate a Beneficiary as aforesaid, or if for any reason such
designation shall be ineffective, in whole or in part, the distribution that
otherwise would have been paid to such Participant shall be paid to the
Participant's estate and in such event the term "Beneficiary" shall include his
estate.

Section 11.02. Dissolution or Merger. If the Company should be liquidated
and/or dissolved, or if the Company should become a party to a merger or
consolidation in which it is not the surviving corporation, every outstanding
Performance Award under this Plan shall become vested and payable to a
Participant as though each applicable Performance Award's Performance Period had
run its term as of the date of such event, and any payment, shall be made as per
termination in accordance with Section 8.03.

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<PAGE> 45

Section 11.03. Claim to Performance Awards and Employment Rights. No
employee or other person shall have any claim or right to be assigned
Performance Awards under this Plan. Neither this Plan nor any action taken
hereunder shall be construed as giving any employee any right to be retained in
the employ of the Company.

Section 11.04. Nontransferability. A Participant's rights and interests
under this Plan, including amounts payable, may not be assigned, pledged, or
transferred except in the event of the Participant's death, to his designated
Beneficiary as provided in this Plan, or in the absence of such designation, by
Will or the laws of descent and distribution.

Section 11.05. Tax Withholding. The Company shall have the right to deduct
from all cash payments any federal, state, or local taxes required by law to be
withheld with respect to such cash payments and, in case of awards paid in
Common Stock, the Participant or other person receiving such Common Stock may be
required to pay to the Company the amount of any such taxes which the Company is
required to withhold with respect to such Common Stock.

Section 11.06. Administrative Expenses. The Company shall bear the expenses
of administering the Plan.

Section 11.07. Governing Law. This Plan shall be construed, administered
and governed in all respects in accordance with the laws of the State of
Wisconsin.

Section 11.08. Gender and Number. Except when otherwise indicated by the
context, any masculine terminology used herein shall also include the feminine
gender, and the definition of any term herein in the singular shall also include
the plural.

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EXHIBIT B

JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
DEFERRED OPTION QUALIFIED PLAN

(AS AMENDED AND RESTATED EFFECTIVE OCTOBER 1, 1998)

1. NAME

Johnson Controls Executive Incentive Compensation Plan

2. PURPOSE

The purpose of the Plan is to:

Provide incentive to the key executives of the Company and its subsidiaries
who have the prime responsibility for the operations of the Company and its
subsidiaries by making them participants in their success.

3. DEFINITIONS

A. The term "Company" means Johnson Controls, Inc., a Wisconsin Corporation,
and any successor thereto that adopts the Plan.

B. The term "Plan" means the arrangement described herein.

C. The term "Plan Year" a fiscal year of the Company.

D. The term "Participant" means an executive of the Company or a subsidiary
who has been approved for participation in the Plan.

E. The term "Board" means the Board of Directors of the Company.

F. The term "Committee" means the Compensation Committee of the Board, which
shall consist of not less than two (2) members of the Board each of whom
is a "non-employee director" as defined in Securities and Exchange
Commission Rule 16b-3(b)(3), or as such term may be defined in any
successor regulation under Section 16 of the Securities Exchange Act of
1934, as amended. In addition, each member of the Committee shall be an
outside director within the meaning of Section 162(m) of the Internal
Revenue Code.

G. The term "Compensation" means the annualized base salary in effect for a
Participant at the close of the fiscal year (or such other date as the
Committee may specify by action taken within 90 days after the beginning
of the Plan Year), including salary being paid on a deferred basis as
well as salary being paid on a current basis.

H. The term "Beneficiary" means the person or persons entitled to receive
the interest of a Participant in the event of the Participant's death.

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I. The term "Operating Profits" means the consolidated income before:

(1) The incentive compensation awards under this Plan.

(2) Any taxes on income.

(3) Extraordinary credits and charges to income less the related tax
effect.

(4) The cumulative effect, less the related tax effect, on prior years
of any accounting change made during the year.

(5) Company expense related to the Savings & Investment Plan.

The calculation of such Operating Profits shall be examined by the
Company's independent public accountants who shall furnish their
opinion that such calculation has been made in accordance with
generally accepted accounting principles consistently applied and in
compliance with the provisions of this Plan.

J. The term "Shareholders' Equity" for a Plan Year means the consolidated
shareholders' equity (sometimes referred to as net worth) of the Company
at the end of the preceding fiscal year of the Company, as set forth in
the Company's annual report for the preceding fiscal year, plus or minus
a proportionate allowance for any change during such Plan year, based on
the period of such change, in the amount of shareholders' equity from
newly-issued or finally-retired capital stock.

K. For the purposes of this Agreement, business combinations treated as an
accounting pooling of interests shall be adjusted to a purchase basis
and Operating Profits and Shareholders' Equity shall be restated
accordingly.

L. The term "Return on Shareholders' Equity" for a Plan Year means the
percentage that Operating Profits for the year is of Shareholders'
Equity for the year.

M. The term division "Return on Assets" for a Plan Year means division
operating income for the year as a percentage of average division assets
employed. (See Corporate Procedure Number 3A 3580 01).

4. ELIGIBILITY AND PARTICIPATION

A. APPROVAL

Awards under the Plan are subject to shareholder approval of the Plan.
Each specific executive of the Company or a subsidiary who is approved
for participation in the Plan by the Committee shall be a Participant as
of the date designated by the Committee. Such executives shall include
corporate and other key senior managers who may be subject to Section
162(m) of the Internal Revenue Code and who are approved for
participation in the Plan by the Committee. Written notice of such
approval shall be given to each executive so approved as soon as
practicable following date of approval.

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B. TERMINATION OF APPROVAL

The Committee may withdraw its approval for participation for a
Participant at any time. In the event of such withdrawal, the executive
concerned shall cease to be an active Participant as of the date selected
by the Committee and the executive shall be notified of such withdrawal
as soon as practicable following such action.

C. NOTIFICATION

D. TRANSFERS IN, OUT OF AND BETWEEN ELIGIBLE POSITIONS

(1) It is contemplated that an executive may be approved for
participation during a portion of a Plan Year and shall be eligible
to receive an award for the year based on the number of full months
as a Participant.

a. A person newly hired or transferred into an eligible position
shall have his/her participation prorated during the first Plan
Year provided the person's employment or transfer occurs at least
two months prior to the end of the Plan Year. Alternatively, and
notwithstanding anything to the contrary herein, the Committee may
at any time grant a formula award to a Participant who is newly
hired or transferred into an eligible job position during the Plan
Year, and fix the terms of any such award, whether or not such
action qualifies for the performance-based exception under Section
162(m) of the Code.

b. A person transferred out of an eligible position may receive a
prorated award at the discretion of the Committee provided he/she
served in the eligible position for at least two full months
during the Plan Year.

(2) Participants transferred between eligible positions having
different award formulae will receive awards prorated to months
served in each eligible position.

E. TERMINATION OF EMPLOYMENT

The Committee shall have the discretion not to make or to reduce an
incentive award for a Plan Year for a Participant whose employment with
the Company or subsidiary is terminated during the year for reasons other
than retirement due to age under the Company's or subsidiary's retirement
program, total and permanent disability, or death.

5. ANNUAL AWARDS TO PARTICIPANTS

A. AWARDS BASED ON FORMULA

Prior to, or within 90 days after, the beginning of each Plan Year, a
formula award shall be determined for each Participant who is eligible to
receive an award for the year. The award (which is communicated

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<PAGE> 49

individually) shall be expressed as a percentage of Compensation
resulting from a formula based on Return on Shareholders Equity (or
division Return on Assets) and growth in Operating Profits. Irrespective
of the formula, no amounts in excess of two million five hundred thousand
dollars ($2,500,000) may be paid to any one Participant for any Plan
Year. Payments are subject to certification in writing by the Committee
prior to payment that the performance goals and other material terms of
the Plan were in fact satisfied.

B. DISCRETIONARY REDUCTIONS TO FORMULA AWARDS

Upon recommendation by the President, the Committee may approve
reductions to a Participant's formula award based upon the individual's
performance and attainment of objectives during the Plan Year. Awards may
be reduced to no less than .8 times the formula percentage yield.

6. PAYMENT OF INCENTIVE AWARDS

A. CURRENT PAYMENT

A Participant's award for a Plan Year, which is not deferred in
accordance with the provisions of Item 6.B. hereof, and a Participant's
award, whether or not he elected deferred payment thereof, for the Plan
Year in which his employment terminates, shall be paid in cash to the
Participant, or his Beneficiary in the event of his death, between the
60th day and the 75th day following the end of the Plan Year. Should the
Committee elect to postpone the payments for any reason, the Committee
may, in its discretion, also elect to pay interest at a reasonable rate
for the period between the 75th day following the end of the Plan Year
and the day on which the payments are in fact made.

B. DEFERRED PAYMENT

(1) ELECTION

Before the first day of each Plan Year, a Participant may irrevocably
elect in writing to have a part or all of his award for the year
under the Plan (but not less than $1,000) deferred and, at his
election, part or all such deferred payment may be converted to Share
Units, as provided below, and credited to a bookkeeping reserve
account which shall be established for the Participant and set up on
the books of the Company and known as his "Share Unit Account",
and/or the dollar amount of part or all of such deferred payment may
be credited to a bookkeeping reserve account which shall be
established for the Participant and set up on the books of the
Company and known as his "Interest Account" and/or the dollar amount
of part or all of such deferred payment may be credited to a
bookkeeping reserve account which shall be established for the
Participant and set up on the books of the Company and known as his
"Equity Fund Account." The term "Share Unit" means a measure of
participation under the Plan having a value based on the market value
of a share of the common stock of

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<PAGE> 50
the Company and other characteristics specified herein. Any other
provision of this Plan to the contrary notwithstanding, the
aggregate number of Share Units to be awarded under this Plan
shall not exceed two (2) percent of the number of issued and
outstanding shares of the Company's Common Stock. Subject to this
limitation, a Participant may also irrevocably elect, once each
year and effective on the next date on which conversions are made
under Item 6.B.2., to convert all or part of an Interest Account
or an Equity Fund Account to the Participant's Share Unit
Account. Such conversions shall be made in the same manner as set
forth in Item 6.B.2., as if the amount for which an election was
made was an award being made effective on that date.

(2) CONVERTING AWARDS TO SHARE UNITS

When a Participant has elected to have a part or all of his
award under the Plan converted to Share Units, it shall be
converted as of the same date on which cash payments are made
or would have been made. Each award shall be converted into
Share Units in the following manner:

a. Determine the market value of a share of common stock of
the Company.

b. Divide the award by such market value.

c. The quotient resulting from such division indicates the
Share Units to be credited.

(3) CONVERTING DIVIDEND AWARDS TO SHARE UNITS

Whenever the Company declares a dividend on its Common Stock,
in cash or in property, at a time when Participants have
Share Units credited to their accounts in the Plan, a
dividend award shall be made to all Participants as of the
date of payment of the dividend. The dividend award for a
Participant shall be determined by multiplying the Share
Units credited to a Participant's account on the date of
payment by the amount of the dividend paid on each share of
common stock. The dividend award shall be converted into
Share Units in the same manner that an award is converted
into Share Units under Item 6.B.(2). In making this
conversion, the market value of a share of the common stock
of the Company shall be determined as of the date the
dividend on the common stock is paid. Any other provision of
this Plan to the contrary notwithstanding, if a dividend is
declared on the common stock of the Company in the form of a
right or rights to purchase shares of capital stock of the
Company or of any entity acquiring the Company, such dividend
award shall not be converted to Share Units, but each Share
Unit credited to a Participant's Share Unit Account at the
time such dividend is paid and each Share Unit thereafter
credited to the Participant's Share

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<PAGE> 51

Unit Account at a time when such rights are attached to
shares of the Company's common stock shall thereafter be
valued as of any point in time on the basis of the aggregate
of the then market value of one share of the common stock of
the Company plus the then market value of such right or
rights then or previously attached to one share of the common
stock of the Company.

(4) ADJUSTMENTS

In the event of a stock dividend on the common stock of the
Company, or any split up or combination of shares of the
common stock of the Company, or other change therein, an
appropriate adjustment shall be made in the aggregate number
of Share Units then standing to the credit of a Participant
so as to give effect to the extend practicable to such change
in the capital structure of the Company and to the purpose
and intent of the Plan.

(5) CREDITS TO INTEREST ACCOUNT

When a Participant has elected to have a part or all of his
award credited to an "Interest Account", the unpaid balance
in such account shall be credited with a simple annual
interest equivalent, as follows: As of the January 1 next
following the Plan Year for which the deferred award was made
such award shall become part of the unpaid balance of such
Interest Account. Such Interest Account shall be credited on
December 31 of each year with an amount equal to interest on
the unpaid balance of such account from time to time
outstanding during the year ending on such December 31 at the
rate determined by adding together the prime rate in effect
at the First Wisconsin National Bank of Milwaukee on the last
banking day prior to the beginning of such year and the prime
rate in effect at said bank on the last banking days of each
of the calendar months of January through November of such
year and dividing such total by 12. In the event that the
Interest Account shall be terminated for any reason prior to
December 31 of any year, such account shall upon such
termination date be credited with an amount equal to interest
at the average prime rate determined as aforesaid on the
unpaid balance from time to time outstanding during that
portion of such year prior to the date of termination.

(6) CREDITS TO EQUITY FUND ACCOUNT

When a Participant has elected to have a part or all of his
award credited to an "Equity Fund Account" the unpaid balance
in such account shall be credited or debited, with an annual
investment return equivalent as follows: As of the day next
following the close of each Plan Year for which an award was
made, such award shall become part of the unpaid balance of
such Equity Fund Account. Such Equity Fund Account shall be
treated as if it

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<PAGE> 52

had been invested as an integral part of the Equity Fund (or
such other fund designated by the Committee) under the
Johnson Controls Savings and Investment Plan and shall be
credited or debited as of the last day of each Plan year with
an amount equal to the net gain or loss in value, as the case
may be, which would have been realized on an amount equal to
the unpaid balance of such Equity Fund Account if it had been
invested in such Equity Fund throughout such Plan Year. In
the event that the Equity Fund Account shall be terminated
for any reason prior to September 30 of any year, such
account shall upon such termination date be credited or
debited with an amount equal to the net gain or loss in value
which would have been realized on an amount equal to the
unpaid balance of such Equity Fund Account if it had been
invested in such Equity Fund during the part of such Plan
Year commencing on the first day thereof and ending on the
date of termination of such account.

(7) DISTRIBUTION UPON TERMINATION OF EMPLOYMENT

Upon termination of a Participant's employment with the
Company or subsidiary for any reason, the Participant, or
his/her Beneficiary in the event of his/her death, shall be
entitled to ten approximately equal annual installment
payments. The amount accumulated in such Participant's
Interest Account, Share Unit Account and/or Equity Fund
Account, as the case may be, shall be distributed as
hereinafter provided.

a. If the Participant elects the Interest Account and/or
Equity Fund Account, the amount, if any, shall be paid in
cash as follows:

i. The first annual payment shall be made no earlier
than the fifteenth day of the first quarter of the
calendar year following the date of termination of
employment, and shall be in an amount equal to the
value of 1/10th of the total amount credited to the
Participant's Interest Account and/or Equity Fund
Account as of January 1 next following date of
termination.

iii. Each succeeding installment payment shall be
determined in a similar manner, i.e., the fraction of
Participant's

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<PAGE> 53

Interest Account and/or Equity Fund Account
balance to be paid out shall increase each year to
1/8th, 1/7th, etc., until the tenth installment
which shall equal the then remaining balance of
the account.

b. If the Participant elects the Share Unit Account, the
amount, if any, shall be paid in cash as follows:

i. The first annual payment shall be made no earlier
than the fifteenth day of the first quarter of the
calendar year following the date of termination of
employment, and shall be in an amount equal to the
value of 1/10th of the number of Share Units credited
to the Participant's account as of the date of
termination of employment. The value of each Share
shall be determined by multiplying the market value
of a share of common stock of the Company on the date
of termination of employment by the number of such
Share Units. Payment shall be made by the Company in
cash. After the amount of the first installment has
been determined, 1/10 of the Share Units credited to
the Participant's account on the date of termination
of employment shall be cancelled as of the date of
termination of employment.

ii. A second annual payment shall be made no earlier
than the fifteenth day of the first quarter of the
calendar year following the year during which the
first anniversary of the date of termination of
employment occurs, and shall be in an amount equal to
the value of 1/9th of the number of Share Units
credited to the Participant's account as of the first
anniversary of the date of termination of employment.
The value of such Share Units shall be determined by
multiplying the market value of a share of the common
stock of the Company on the first anniversary of the
date of termination of employment by the number of
such Share Units. Payment shall be made by the
Company in cash.

Each succeeding installment payment shall be
determined in a similar manner, the tenth annual
installment being an amount equal to the value of the
total number of Share Units credited to the account
of the Participant on the ninth anniversary of the
date of termination of employment.

(8) DISTRIBUTION IN EVENT OF FINANCIAL EMERGENCY

If requested by a Participant while in the employ of the
Company or a subsidiary and the Committee determines that a
financial emergency has occurred in the financial affairs of
the Participant, the Interest, Share Unit and/or Equity Fund
Accounts of the

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<PAGE> 54

Participant on the date the Participant makes the request may
be paid out at the sole discretion of the Committee in the
same manner they would have been paid out had the Participant
terminated his employment with the Company or Subsidiary on
the date of such request. In the event of a payout due to the
financial emergency, a second Interest, Share Unit or Equity
Fund Account shall be established for the Participant and any
awards made to the Participant thereafter shall be credited
to this second Interest, Share Unit or Equity Fund Account.
The Participant's rights to the second Interest, Share Unit
or Equity Fund Account shall be the same as his rights to the
initial Interest, Share Unit or Equity Fund Account.

(9) ACCELERATION OF PAYMENTS

Notwithstanding the provisions in Item 6.B.(7) and (8), if
the amount remaining in a Participant's Interest Account,
Share Unit or Equity Fund Account at any time is less than
$50,000, or in the event of a financial emergency occurring
in the personal affairs of the Participant, or his
Beneficiary in case of his death, during the payout period,
the Committee may elect to accelerate the payout thereafter
of the Participant's Interest, Share Unit or Equity Fund
Account.

(10) MARKET VALUE

The market value of a share of the common stock of the
Company on a particular day shall be determined by the
Committee. The market value shall be the closing price on the
New York Stock Exchange on the day in question, or the day of
the last previous sale, if there shall not be any sale on the
day in question.

(11) BENEFICIARY DESIGNATION

A Participant may designate a Beneficiary who is to receive,
upon his death, the distributions that otherwise would have
been paid to him. All designations shall be in writing and
shall be effective only if and when delivered to the
Secretary of the Company during the lifetime of the
Participant. If a Participant designates a Beneficiary
without providing in the designation that the Beneficiary
must be living at the time of each distribution, the
designation shall vest in the Beneficiary all of the
distribution whether payable before or after the
Beneficiary's death, and any distributions remaining upon the
Beneficiary's death shall be made to the Beneficiary's
estate.

A Participant may from time to time during his lifetime
change his Beneficiary by a written instrument delivered to
the Secretary of the Company. In the event a Participant
shall not designate a Beneficiary as aforesaid, or if for any
reasons such designation

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<PAGE> 55

shall be ineffective, in whole or in part, the distribution
that otherwise would have been paid to such Participant shall
be paid to his estate and in such event the term "Beneficiary"
shall include his estate.

(12) CORPORATE CHANGES

a. DISSOLUTION OR LIQUIDATION OF COMPANY

Notwithstanding any provision herein to the contrary, upon
the dissolution or liquidation of the Company, the Share
Units credited to Participant's Share Unit Accounts shall
be converted to dollars as of the day preceding the date
of dissolution or liquidation, using the method applied in
Item 6.B.(6) hereof to determine installment payments. The
Company shall cause such dollar balance to be paid out in
cash in a lump sum to the participants, or their
Beneficiaries, as the case may be, within 60 days
following the date of dissolution or liquidation.

b. MERGER, CONSOLIDATION OR SALE OF ASSETS

Notwithstanding anything herein to the contrary, in the
event that the Company desires to consolidate with, merge
into, or transfer all or substantially all of its assets
to another corporation (hereinafter referred to as
"Successor Corporation"), such Successor Corporation may
assume the obligation under this Plan, provided that
appropriate amendments are made to the Plan. In the event
the Plan is not continued within a reasonable period of
time by the Successor Corporation, then as of the date
preceding the date of such consolidation, merger, or
transfer, the account of each Participant shall be
converted into dollars and distributed.

7. RIGHTS OF PARTICIPANTS

No Participant or Beneficiary shall have any interest in any fund or in any
specific asset or assets of the Company (or any subsidiary) by reason of any
account under the Plan. It is intended that the Company has merely a
contractual obligation to make payments when due hereunder and it is not
intended that the Company (or any subsidiary) hold any funds in reserve or
trust to secure payments hereunder. No Participant may assign, pledge, or
encumber his/her interest under the Plan, or any part thereof, except that a
Participant may designate a Beneficiary as provided herein.

Nothing contained in this Plan shall be construed to:

A. Give any employee or Participant any right to receive any award other
than in the sole discretion of the Committee;

B. Give a Participant any rights whatsoever with respect to share(s) of
common stock of the Company;
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<PAGE> 56

C. Limit in any way the right of the Company or subsidiary to terminate a
Participant's or other employee's employment at any time; or

D. Be evidenced of any agreement or understanding, express or implied, that
a Participant or other employee will be retained in any particular
position or at any particular rate of remuneration.

8. ADMINISTRATION

The Plan shall be administered by the Committee. The Committee may, from
time to time, establish rules for the administration of the Plan that are
not inconsistent with the provisions of the Plan.

9. AMENDMENT OR TERMINATION

The Committee may modify or amend, in whole or in part, any or all of the
provisions of the Plan, except as to those terms or provisions that are
required Section 162(m) of the Internal Revenue Code to be approved by the
shareholders, or suspend or terminate it entirely; provided, however, that
no such modifications, amendment, or suspension or termination may, without
the consent of the Participant, or his Beneficiary in the case of his/her
death, reduce the right of a Participant, or his/her Beneficiary, as the
case may be, to any payment due under the Plan.

10. CHANGE OF CONTROL

Notwithstanding any other provision of this Plan, within 30 days of a Change
of Control (as defined below), each participant shall be entitled to receive
a lump sum payment in cash equal to the product of (x) such participant's
formula ward for the year in which the Change of Control occurs, based on
maximum achievable award for such Participant under the Plan and (y) a
fraction, the numerator of which is the number of days after January 1 in
the year in which the Change of Control occurs and the denominator of which
is 365. In addition, the Company shall pay to each Participant a lump sum
amount in cash within 30 days of the Change of Control all amounts
accumulated in such Participant's Interest, Share Unit and Equity Fund
Account under the Plan. In determining the amount accumulated in a
Participant's Share Unit Account, each Share Unit shall have a value equal
to the higher of (x) the highest reported sales price, regular way, of a
share of the Company's common stock on the Composite Tape for New York Stock
Exchange Listed Stocks (the "Composite Tape") during the sixty-day period
prior to the date of the Change of Control of the Company and (y) if the
Change of Control of the Company is the result of a transaction or series of
transactions described in paragraphs A. or C. of the definition of Change of
Control of the Company set forth below, the highest price per share of
common stock of the Company paid in such transaction or series of
transactions. A Change of Control means any of the following events:

A. The acquisition, other than from the Company, by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the

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<PAGE> 57
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either:

(1) The then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or

(2) The combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Company Voting Securities"), provided, however,
that any acquisition by (x) the Company or any of its subsidiaries,
or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (y) any
corporation with respect to which, following such acquisition, more
than 60% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, shall not
constitute a Change in Control of the Company; or

B. Individuals who, as of May 24, 1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to May 24, 1989 whose election or nomination for election by
the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors
of the Company (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act); or

C. Approval by the shareholders of the Company of a reorganization, merger
or consolidation (a "Business Combination"), in each case, with respect
to which all or substantially all of the individuals and entities who
were the respective beneficial owners of the Outstanding Company Common
Stock and Company Voting Securities immediately prior to such Business
Combination do not, following such Business Combination, beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors as the case may be, of the corporation resulting
from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the

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<PAGE> 58

Outstanding Company Common Stock and Company Voting Securities, as the
case may be; or

D. A complete liquidation or dissolution of the Company or sale or other
disposition of all or substantially all of the assets of the Company
other than to a corporation with respect to which, following such sale
or disposition, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election
of directors is then owned beneficially, directly or indirectly, by all
or substantially all of the individuals and entitles who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Company Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of
the Outstanding Company Common Stock and Company Voting Securities, as
the case may be, immediately prior to such sale or disposition.

11. TAX WITHHOLDING

The Company shall have the right to deduct from all cash payments any
federal, state, or local taxes required by law to be withheld with respect
to such cash payments and, in case of awards paid in Common Stock, the
Participant or other person receiving such Common Stock may be required to
pay to the Company the amount of any such taxes which the Company is
required to withhold with respect to such Common Stock.

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JOHNSON CONTROLS, INC.
P.O. BOX 591
MILWAUKEE, WI 53201

SHAREHOLDER'S PROXY ANNUAL MEETING-JANUARY 27, 1999

The undersigned, having received the Notice of Meeting and Proxy Statement dated
December 4, 1998, and Annual Report for 1998, hereby appoints J.P. Kennedy and
J.H. Keyes, and each of them, proxies with power of substitution to vote for the
undersigned at the annual shareholders' meeting of Johnson Controls, Inc., on
January 27, 1999, and at any adjournments thereof.

This proxy when properly executed will be voted in the manner directed therein
by the undersigned. If no direction is made, this proxy will be voted for all
nominees listed in Proposal 1 and for Proposals 2, 3 and 4.

- DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED -
- ------------------------------------------------------------------------------------------------------------------------------------

___ ___
| |
| JOHNSON CONTROLS, INC. 1999 ANNUAL MEETING |
The Board of Directors recommends a vote FOR Proposals 1, 2, 3 and 4. If no direction is made, this proxy will be voted FOR all
nominees listed in Proposal 1 and FOR Proposals 2, 3 and 4.

1. ELECTION OF DIRECTORS: 1 - NATALIE A. BLACK 2 - ROBERT A. CORNOG / / FOR all nominees / / WITHHOLD AUTHORITY
3 - JAMES H. KEYES 4 - WILLIAM H. LACY listed to the left to vote for all
(except as nominees listed to
specified below). the left.

__________________________
(Instructions: To withhold authority to vote for any indicated nominee, write number(s) of ---------> | |
nominee(s) in the box provided to the right.) |__________________________|

2. Ratify the selection of PricewaterhouseCoopers as our independent auditors / / FOR / / AGAINST / / ABSTAIN
for 1999.

3. Ratify the Long Term Performance Plan. / / FOR / / AGAINST / / ABSTAIN

4. Ratify the Executive Incentive Compensation Plan. / / FOR / / AGAINST / / ABSTAIN

5. In their discretion, upon any other matters which may properly come before the meeting or any adjournments thereof, hereby
revoking any proxy heretofore given by the undersigned for such meeting.

Check appropriate box
Indicate changes below: Date ________________
Address Change? / / Name Change? / / ___________________________________
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SIGNATURE(S) IN BOX

Please sign name exactly as it appears
hereon. When signed as attorney,
executor, trustee or guardian, please
add title. For joint accounts, each
owner should sign.

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