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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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
AlliedSignal Inc.
(Name of Registrant as Specified In Its Charter)
AlliedSignal Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of Securities to which
transaction applies:
__________________________________________
2) Aggregate number of securities to which
transaction applies:
__________________________________________
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (1):
__________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________
______
(1) Set forth the amount on which the filing fee is
calculated and state how it was determined.
[ ] 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:
_________________________
2) Form, Schedule or Regis-
tration Statement No.:
_________________________
3) Filing Party:
_________________________
4) Date Filed:
_________________________
<PAGE>
[LOGO]
AlliedSignal Inc.
P.O. Box 3000
Morristown, NJ 07962-2496
LARRY BOSSIDY
Chairman and
Chief Executive Officer
March 10, 1994
Dear Shareowner:
It is my pleasure to invite you to attend AlliedSignal's 1994 Annual Meeting of
Shareowners. The meeting will be held on Monday, April 25, 1994 at 10:00 a.m.
local time at the Company's headquarters, 101 Columbia Road, Morris Township,
New Jersey. The Notice of Annual Meeting and Proxy Statement accompanying this
letter describe the business to be transacted at the meeting.
During the meeting, I will report to you on the Company's continued progress in
satisfying our customers, improving our performance and generating higher
financial value for our shareowners. We welcome this opportunity to have a
dialogue with our shareowners and look forward to your comments and questions.
If you plan to attend the meeting, please complete the enclosed admission
notification form and return it in the envelope with your proxy card or send it
to AlliedSignal Inc., Shareholder Relations, P.O. Box 50000, Morristown, New
Jersey 07962. Your name will be placed on an admission list held at the entrance
to the meeting.
It is important that your shares be represented at the meeting, regardless of
the number you may hold. Whether or not you plan to attend, please sign, date
and return your proxy card as soon as possible. This will not prevent you from
voting your shares in person if you are present.
A map and directions to the Company's headquarters appear on the inside back
cover. I look forward to seeing you on April 25.
Sincerely,
LARRY BOSSIDY
NOTE: To listen to the meeting in progress or, after the meeting for a
24-hour period, to hear a tape of the meeting, you may dial
1-900-200-2000. Your cost will be $.45 for the first minute and $.35 for
each additional minute (e.g., 30 minutes = $10.60).
<PAGE>
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareowners of AlliedSignal Inc. (the 'Company') will
be held on Monday, April 25, 1994 at 10:00 a.m. local time at the headquarters
of the Company, 101 Columbia Road, Morris Township, New Jersey, to consider and
take action upon the following matters described in the accompanying Proxy
Statement:
(1) Election of six directors;
(2) Amendment of the 1993 Stock Plan for Employees of AlliedSignal Inc. and
its Affiliates;
(3) Amendment of the AlliedSignal Inc. Incentive Compensation Plan for
Executive Employees;
(4) Amendment of the Restricted Stock Plan for Non-Employee Directors of
AlliedSignal Inc.;
(5) Appointment of Price Waterhouse as independent accountants for 1994;
(6) A shareowner proposal regarding directors' tenure;
(7) A shareowner proposal regarding executive compensation; and
(8) The transaction of such other business as may properly come before the
meeting.
The Board of Directors has determined that owners of record of the
Company's Common Stock at the close of business on March 1, 1994, are entitled
to notice of and to vote at the meeting.
By Order of the Board of Directors
ANDREW B. SAMET
Vice President, Secretary
and Associate General Counsel
AlliedSignal Inc.
101 Columbia Road
Morris Township, NJ 07962
March 10, 1994
YOUR VOTE IS IMPORTANT
To vote your shares, please indicate your choices, sign
and date the proxy card, and return it in the enclosed
postage-paid envelope. You may vote in person at the
meeting even though you send in your proxy.
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Table of Contents Page
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General Information................................................................................ 1
1 -- Election of Directors......................................................................... 2
The Board of Directors and Committees of the Board............................................ 7
Compensation of Directors..................................................................... 9
Voting Securities.................................................................................. 10
Executive Compensation............................................................................. 12
Plan Amendments to Preserve Tax Deductibility...................................................... 19
2 -- Amendment of 1993 Stock Plan............................................................. 20
3 -- Amendment of Incentive Compensation Plan................................................. 24
4 -- Amendment of Directors' Stock Plan............................................................ 27
5 -- Appointment of Independent Accountants........................................................ 29
Shareowner Proposals............................................................................... 30
6 -- Proposal regarding directors' tenure..................................................... 30
7 -- Proposal regarding executive compensation................................................ 31
Additional Information............................................................................. 33
Exhibit A -- Amended 1993 Stock Plan............................................................... A-1
Exhibit B -- Amended Incentive Compensation Plan................................................... B-1
Exhibit C -- Amended Directors' Stock Plan......................................................... C-1
Directions to Company Headquarters................................................................. Inside
Back
Cover
</TABLE>
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of AlliedSignal Inc. (the 'Company') for use
at the Annual Meeting of Shareowners to be held on Monday, April 25, 1994, and
at any adjournment thereof. The solicitation of proxies provides all shareowners
who are entitled to vote on matters that come before the meeting with an
opportunity to do so whether or not they are able to attend the meeting in
person. This Proxy Statement and the related proxy card are first being sent to
the Company's shareowners on or about March 10, 1994.
Owners of record of the Company's Common Stock (the 'Common Stock') at the
close of business on March 1, 1994, are entitled to notice of and to vote at the
Annual Meeting. BECAUSE THE ANNUAL MEETING RECORD DATE PRECEDES THE MARCH 14
DISTRIBUTION OF SHARES PURSUANT TO A TWO-FOR-ONE SPLIT OF THE COMMON STOCK (THE
'STOCK SPLIT') DECLARED BY THE BOARD OF DIRECTORS ON FEBRUARY 7, 1994, VOTES
WILL BE CALCULATED ON A PRE-SPLIT BASIS. REFERENCES ON THE PROXY CARD AND IN
THIS PROXY STATEMENT TO NUMBERS OF SHARES AND RELATED INFORMATION ARE ON A
PRE-SPLIT BASIS, UNLESS OTHERWISE INDICATED.
At February 22, 1994, there were 142,365,089 shares of Common Stock
outstanding. The owners of a majority of the shares entitled to vote, present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the meeting. Shareowners are entitled to one vote for each share
held. If a shareowner is a participant in the Company's Dividend Reinvestment
Plan, the proxy card represents shares in the participant's plan account, as
well as shares held of record in the participant's name.
The shares represented by a properly signed and returned proxy card will be
voted as specified by the shareowner. If a proxy card is signed and returned but
no specification is made, the shares will be voted FOR the election of all
nominees for director (Proposal 1), amendment of the 1993 Stock Plan (Proposal
2), the Incentive Compensation Plan (Proposal 3) and the Directors' Stock Plan
(Proposal 4), and the appointment of independent accountants (Proposal 5), and
AGAINST the shareowner proposals described in this Proxy Statement (Proposals 6
and 7). A proxy may be revoked by a shareowner at any time before it is voted by
notice in writing delivered to the Secretary, by submission of another proxy
bearing a later date or by voting in person at the Annual Meeting.
Abstentions are not counted as votes 'for' or 'against' a proposal, but are
counted in determining the number of shares present or represented on a
proposal. Therefore, since approval of Proposals 2 through 7 requires the
affirmative vote of a majority of the shares of Common Stock present or
represented, abstentions have the same effect as a vote 'against' those
proposals. New York Stock Exchange rules prohibit brokers from voting on
Proposals 6 and 7 without receiving instructions from the beneficial owner of
the shares. In the absence of instructions, shares subject to such 'broker
non-votes' will not be counted as voted or as present or represented on those
proposals.
It is the policy of the Company that any proxy, ballot or other voting
material that identifies the particular vote of a shareowner will, if requested
thereon by the shareowner, be kept confidential, except in the event of a
contested proxy solicitation or as may be required by law. The Company may be
informed whether or not a particular shareowner has voted and will have access
to any comment written on a proxy, ballot or other material and to the identity
of the commenting shareowner. Under the policy, the inspectors of election at
any meeting will be independent parties unaffiliated with the Company.
1
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1 -- ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes that serve
staggered three-year terms and are as nearly equal in number as possible. The
Board has nominated six candidates for election as directors, four for a term
ending at the 1997 Annual Meeting and two for a term ending at the 1995 Annual
Meeting. The vote of a plurality of the shares of Common Stock present or
represented and entitled to vote at the Annual Meeting is required for election
as a director.
All of the nominees are currently directors. All directors were previously
elected by the shareowners, except Ann M. Fudge, Andrew C. Sigler and John R.
Stafford, who were elected by the Board of Directors since the last Annual
Meeting. Jewel Plummer Cobb and Robert D. Kilpatrick have reached retirement age
and will serve until the Annual Meeting in accordance with the directors'
retirement policy.
Each nominee has consented to being named in the Proxy Statement and to
serve if elected. If prior to the Annual Meeting any nominee should become
unavailable to serve, the shares represented by a properly signed and returned
proxy card will be voted for the election of such other person as may be
designated by the Board of Directors, or the Board may determine to leave the
vacancy temporarily unfilled. All directors serve subject to the retirement
policy described on page 7.
Certain information regarding each nominee and each director continuing in
office after the Annual Meeting is set forth below, including age and principal
occupation, a brief account of business experience during at least the last five
years, certain other directorships currently held and the year in which the
individual was first elected a director of the Company or one of its predecessor
companies.
NOMINEES FOR ELECTION
FOR TERM EXPIRING IN 1997
<TABLE>
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[PHOTO OF LAWRENCE A. BOSSIDY]
LAWRENCE A. BOSSIDY, Chairman of the Board and Chief Executive Officer of the Company
Mr. Bossidy became Chief Executive Officer of the Company in July 1991 and Chairman of
the Board in January 1992. He previously served in a number of executive and
financial positions with General Electric Company, a diversified services and
manufacturing company, which he joined in 1957. Mr. Bossidy was Chief Operating
Officer of General Electric Credit Corporation (now General Electric Capital Company)
from 1979 to 1981, Executive Vice President and Sector Executive of GE's Services and
Materials Sector from 1981 to 1984, and Vice Chairman and Executive Officer of GE from
1984 until he joined the Company. He is a director of Merck & Co., Inc.
Director since 1991 Age 59
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2
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<TABLE>
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[PHOTO OF ANN M. FUDGE]
ANN M. FUDGE, Executive Vice President of General Foods USA and President of Maxwell
House Coffee Company
Ms. Fudge joined General Foods USA in 1986 and held several planning and marketing
positions before being appointed Executive Vice President in 1991. She also served
as General Manager of General Foods' Dinners and Enhancers Division, which markets
several well-known food brands, from 1991 until early 1994, when she was named
President of General Foods' Maxwell House Coffee Company. General Foods USA is an
operating unit of Kraft General Foods, Inc., the multinational food subsidiary of
Philip Morris Companies Inc. Ms. Fudge is a director of Liz Claiborne, Inc.
Director since 1993 Age 42
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[PHOTO OF PAUL X. KELLEY]
PAUL X. KELLEY, Vice Chairman for Corporate Strategy of Cassidy &
Associates
General Kelley served as Commandant of the Marine Corps from 1983 until his retirement
in 1987. He assumed his current position with Cassidy & Associates, a
Washington-based government relations firm, in 1989. General Kelley is a director of
GenCorp Inc., PHH Corporation, Saul Centers, Inc., Sturm, Ruger & Company, Inc., UST
Inc. and The Wackenhut Corporation.
Director since 1987 Age 65
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[PHOTO OF ROBERT C. WINTERS]
ROBERT C. WINTERS, Chairman and Chief Executive Officer of The Prudential Insurance
Company of America
Mr. Winters joined Prudential, a provider of insurance and financial services, in
1953. During his career with Prudential, he held various managerial positions prior
to his election as Executive Vice President in 1978, Vice Chairman in 1984 and
Chairman and Chief Executive Officer in 1987.
Director since 1989 Age 62
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</TABLE>
3
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FOR TERM EXPIRING IN 1995
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[PHOTO OF WILLIAM R. HASELTON]
WILLIAM R. HASELTON, Retired Vice Chairman of Champion International Corporation
Mr. Haselton retired as Vice Chairman of Champion International Corporation, a paper
and forest products company, in 1989, after assuming that position in 1984 upon
Champion's acquisition of St. Regis Corporation. He had held a number of senior
management positions with St. Regis before becoming a director in 1972, President in
1973, President and Chief Executive Officer in 1979 and Chairman and Chief Executive
Officer in 1981.
Director since 1981 Age 69
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[PHOTO OF DELBERT C. STALEY]
DELBERT C. STALEY, Retired Chairman and Chief Executive Officer of NYNEX Corporation
Mr. Staley served as Chairman and Chief Executive Officer of NYNEX Corporation, a
telecommunications company, from 1983 until he retired in 1989. He continued as a
director and served as Chairman of the NYNEX International Management Committee until
1991. He is a director of Ball Corporation, The Bank of New York, The Bank of New York
Company, Inc., Dean Foods Company, Digital Equipment Corporation, John Hancock Mutual
Life Insurance Company and Polaroid Corporation.
Director since 1987 Age 69
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</TABLE>
INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1995
<TABLE>
<S> <C>
[PHOTO OF RUSSELL E. PALMER]
RUSSELL E. PALMER, Chairman and Chief Executive Officer of The Palmer Group
After serving seven years as Dean of The Wharton School of the University of
Pennsylvania, Mr. Palmer in 1990 established The Palmer Group, a private investment
firm. He previously served as Managing Director and Chief Executive Officer of
Touche Ross International and Managing Partner and Chief Executive Officer of Touche
Ross & Co. (USA) (now Deloitte and Touche). He is a director of Bankers Trust Company,
Bankers Trust New York Corporation, Contel Cellular Inc., Federal Home Loan Mortgage
Corporation, The Goodyear Tire & Rubber Company, GTE Corporation, Imasco Limited, The
May Department Stores Company and Safeguard Scientifics, Inc.
Director since 1987 Age 59
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</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
[PHOTO OF ANDREW C. SIGLER]
ANDREW C. SIGLER, Chairman and Chief Executive Officer of Champion International
Corporation
Mr. Sigler began his career at Champion International Corporation, a paper and forest
products company, in 1956. He was elected President and Chief Executive Officer in
1974 and Chairman and Chief Executive Officer in 1979. He is a director of
Bristol-Myers Squibb Company, Chemical Banking Corporation and General Electric
Company.
Director since 1994 Age 62
- --------------------------------------------------------------------------------------
[PHOTO OF THOMAS P. STAFFORD]
THOMAS P. STAFFORD, Consultant, General Technical Services, Inc.
Lt. Gen. Stafford joined the consulting firm of General Technical Services, Inc. in
1984. He is also Vice Chairman and co-founder of Stafford, Burke and Hecker, Inc., a
Washington-based consulting firm. After serving as an astronaut for a number of years,
he retired in 1979 from the Air Force as Deputy Chief of Staff for Research,
Development and Acquisition and served as Vice Chairman of Gibraltar Exploration
Limited until 1984. Lt. Gen. Stafford is also Chairman of the Board of Omega Watch
Corporation of America and is a director of CMI Corporation, Fisher Scientific
International Inc., Pacific Scientific Company, Seagate Technology Inc., Spectrum
Information Technologies, Inc., Tremont Corporation, The Wackenhut Corporation and
Wheelabrator Technologies Inc.
Director since 1981 Age 63
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</TABLE>
5
<PAGE>
INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1996
<TABLE>
<S> <C>
[PHOTO OF HANS W. BECHERER]
HANS W. BECHERER, Chairman and Chief Executive Officer of Deere & Company
Mr. Becherer began his business career with Deere & Company, a manufacturer of mobile
power machinery and a supplier of financial services, in 1962. After serving in a
variety of managerial and executive positions, he became a director of Deere in 1986
and was elected President and Chief Operating Officer in 1987, President and Chief
Executive Officer in 1989 and Chairman and Chief Executive Officer in 1990. He is a
director of Schering-Plough Corporation.
Director since 1991 Age 58
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[PHOTO OF EUGENE E. COVERT]
EUGENE E. COVERT, T. Wilson Professor of Aeronautics, Massachusetts Institute of
Technology
Dr. Covert has been associated with the Massachusetts Institute of Technology since
1952. He became Professor of Aeronautics and Astronautics in 1968, serving as
Department Head from 1985 until mid-1990, and also became the T. Wilson Professor of
Aeronautics in 1993. Dr. Covert is a director of Physical Sciences Inc. and Rohr
Industries, Inc.
Director since 1987 Age 68
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[PHOTO OF ROBERT P. LUCIANO]
ROBERT P. LUCIANO, Chairman and Chief Executive Officer of Schering-Plough Corporation
Mr. Luciano joined Schering-Plough Corporation, a manufacturer and marketer of
pharmaceuticals and consumer products, in 1978. He served as President from 1980 to
1986 and became Chief Executive Officer in 1982 and Chairman of the Board in 1984. He
is a director of Borden, Inc., C.R. Bard, Inc. and Merrill Lynch & Co.
Director since 1989 Age 60
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</TABLE>
6
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<TABLE>
<S> <C>
[PHOTO OF JOHN R. STAFFORD]
JOHN R. STAFFORD, Chairman, President and Chief Executive Officer of American Home
Products Corporation
Mr. Stafford has held a number of positions with American Home Products, a
manufacturer of health care products, since joining that company in 1970. He served as
General Counsel, Vice President, Senior Vice President and Executive Vice President
before becoming President in 1981, an office he held until 1990 and which he resumed
in early 1994. Mr. Stafford was elected Chairman of the Board and Chief Executive
Officer in 1986. He is a director of Chemical Banking Corporation, Metropolitan Life
Insurance Company and NYNEX Corporation.
Director since 1993 Age 56
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</TABLE>
The Board of Directors and Committees of the Board
The business of the Company is managed under the direction of the Board of
Directors. There were nine meetings of the Board in 1993, with individual
attendance averaging 96% of the meetings. Average attendance by incumbent
directors at all meetings of the Board and Committees of the Board on which they
served was 96%.
The Board of Directors' retirement policy establishes 70 as the retirement
age for non-employee directors, as well as for any director who is or has been
the Company's Chief Executive Officer. A director who reaches retirement age
shall serve until the next Annual Meeting. The policy also provides that
non-employee directors who discontinue the principal position or identification
which prevailed at the time of their election (other than by virtue of a
promotion) shall offer to tender their resignations as directors and that an
employee director (other than the Chief Executive Officer) shall resign
following termination of service as an active employee of the Company. The Board
has discretion to make exceptions to the policy.
Because of the number of matters requiring Board consideration, and to make
the most effective use of individual Board members' capabilities, the Board of
Directors has established Committees to devote attention to specific subjects
and to assist it in the discharge of its responsibilities. The functions of
these Committees, their current members and the number of meetings held during
1993 are described below. A non-employee director may also attend a Committee
meeting as an alternate member at the request of the Committee Chairman (with
the concurrence of the Chairman of the Board).
The Audit Committee recommends the firm to be appointed as independent
accountants to audit the Company's financial statements and to perform services
related to the audit; reviews the scope and results of the audit with the
independent accountants; reviews with management and the independent accountants
the Company's interim and year-end operating results; considers the adequacy of
the internal accounting and auditing procedures of the Company;
7
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and considers the accountants' independence. The members of the Audit Committee,
which met five times in 1993, are Messrs. Palmer (Chairman), Becherer, Haselton
and Winters, Ms. Fudge and Gen. Kelley.
The Corporate Responsibility Committee reviews the policies and programs
which are designed to assure the Company's compliance with legal and ethical
standards and which affect its role as a responsible corporate citizen,
including those relating to human resources issues such as equal employment
opportunity, to health, safety and environmental matters, and to proper business
practices. The members of the Committee are Messrs. Kilpatrick (Chairman) and
Palmer, Drs. Cobb and Covert, Ms. Fudge, Gen. Kelley and Lt. Gen. T. Stafford.
It met four times in 1993.
The Executive Committee possesses the powers of the Board to manage and
direct the business and affairs of the Company during the interval between Board
meetings, except as provided by Delaware law and except for those matters
assigned to the Audit and Management Development and Compensation Committees.
The members of the Executive Committee, which did not meet in 1993, are Messrs.
Bossidy (Chairman), Kilpatrick and Staley.
The Management Development and Compensation Committee reviews and
recommends the compensation arrangements for officers; approves such
arrangements for other senior level employees; considers matters related to
management development and succession and recommends individuals for election as
officers; and reviews or takes such other action as may be required in
connection with the bonus, stock and other benefit plans of the Company and its
subsidiaries. It met five times in 1993. The Committee members are Messrs.
Staley (Chairman), Haselton, Kilpatrick, Luciano, J. Stafford and Winters.
The Nominating and Board Affairs Committee has as its principal role the
consideration and recommendation of individuals for nomination as directors. The
names of potential director candidates are drawn from a number of sources,
including recommendations from members of the Board, management and shareowners.
Shareowners wishing to recommend Board nominees should submit their
recommendations in writing to the Secretary, AlliedSignal Inc., P.O. Box 4000,
Morristown, New Jersey 07962, with the submitting shareowner's name and address
and pertinent information about the proposed nominee similar to that set forth
in this Proxy Statement for Board nominees, including current principal
occupation and employment, principal positions held during the last five years
and a list of all companies which the individual serves as a director. (See the
heading 'Additional Information -- Other Action at the Meeting' for a summary of
the procedure applicable to a shareowner nomination at an annual meeting.) This
Committee also reviews and makes recommendations to the Board with respect to
the composition of Board Committees and other Board-related matters, including
its organization, size, composition and compensation, as well as the
responsibilities, functions and talents of the Board and its members. The
members of the Nominating and Board Affairs Committee, which met three times in
1993, are Messrs. Luciano (Chairman), Kilpatrick, J. Stafford, Staley and
Winters.
The Retirement Plans Committee appoints the trustees for funds under the
employee pension benefit plans of the Company and certain subsidiaries; reviews
funding strategies; sets investment policy for fund assets; and oversees and
appoints members of other committees
8
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investing fund assets. This Committee met three times in 1993. Its members are
Messrs. Winters (Chairman), Becherer, Kilpatrick, Luciano and Palmer.
The Technology Committee has responsibility for corporate-wide technology
matters, including research, development and engineering, and advises the
Company with respect to its technology program and budget, proposed changes in
corporate strategy where technology is a significant component, and new
technologies of importance to the Company's existing business areas. The members
of this Committee are Lt. Gen. T. Stafford (Chairman), Drs. Cobb and Covert,
Gen. Kelley and Mr. Staley. It met twice in 1993.
Compensation of Directors
Non-employee directors receive an annual Board retainer of $35,000 and a
fee of $1,500 for Board meetings attended on any day (nine during 1993). They
also receive an annual retainer of $5,400 for each Board Committee served, with
Committee Chairmen receiving an additional retainer of $4,000 for the Audit and
Management Development and Compensation Committees and $2,000 for all other
Board Committees. While no meeting fees are generally paid for attendance at
Committee meetings, a non-employee director who attends one or more Committee
meetings on any day as an alternate member receives a fee of $1,500. In
addition, a $1,000 fee is paid to non-employee directors for attendance at a
Committee meeting, or other extraordinary meeting related to Board business,
which occurs apart from a Board meeting, and a $1,000 per day fee is paid for
special assignments. Non-employee directors are also provided with $350,000 in
business travel accident insurance and are eligible to elect, without
contribution by them, $100,000 in term life insurance and medical and dental
coverage for themselves and their eligible dependents. All directors are
reimbursed for expenses incurred in attending meetings.
Under the Deferred Compensation Plan for Non-Employee Directors, a
non-employee director may elect to defer, until a specified calendar year or
retirement from the Board, all or any portion of the director's compensation and
to have such compensation credited to a deferred account in cash or shares of
Common Stock. Amounts credited accrue amounts equivalent to interest or to
dividends. Interest on amounts deferred in 1994 and in any year thereafter will
be the same as that determined by the Management Development and Compensation
Committee for amounts deferred during the same year under the Company's
Incentive Compensation Plan (10% for 1994). Upon a change in control, all
deferred amounts will be considered cash equivalents and a director who has so
elected will be entitled to a lump sum payment of such amounts.
Pursuant to the Retirement Plan for Non-Employee Directors, directors who
retire from the Board at age 60 or above with at least five years of service as
a non-employee director are eligible for a retirement benefit at an annual rate
equal to the annual Board retainer in effect at retirement. A director who
retires at age 70 or above is entitled to such benefit for life, while a
director retiring between ages 60 and 70 is entitled to such benefit for a
number of months equal to the number of months served. In the event of the
director's death following retirement, benefits will continue to be paid to any
surviving spouse until the total number of payments made to the
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director or spouse equals the lesser of the number of months served or 120
months. A director (or spouse) who is entitled to a retirement benefit during
the two-year period following a change in control will receive a lump sum
payment equal to the present value of the benefit, if the director has so
elected.
Under the Restricted Stock Plan for Non-Employee Directors, each
non-employee director has received a one-time grant of 1,500 shares of Common
Stock, which are subject to transfer restrictions until the director's service
terminates with the consent of a majority of the other members of the Board,
provided termination occurs at or after age 65. During the restricted period,
the director has the right to receive dividends on and the right to vote the
shares. At the end of the restricted period, a director is currently entitled to
one-tenth of the shares granted for each year of service. The shares will be
forfeited if the director's service terminates (other than for death or
disability) prior to the end of the restricted period. (A proposal seeking
shareowner approval of amendments to the plan is set forth below under
'Amendment of Directors' Stock Plan.')
----------------------------
VOTING SECURITIES
As of February 22, 1994, State Street Bank & Trust Company, 225 Franklin
Street, Boston, Massachusetts 02101 ('State Street'), held 19,821,126 shares, or
approximately 13.9%, of the outstanding Common Stock as trustee of the Company's
savings plans. Under the terms of the plans, State Street is required to vote
shares attributable to any participant in accordance with instructions received
from the participant and to vote all shares for which it shall not have received
instructions in the same ratio as the shares with respect to which instructions
were received. State Street disclaims beneficial ownership of the shares
referred to above. State Street also held 1,037,508 shares, or approximately
0.7%, of the outstanding Common Stock as trustee of various trusts, with sole
voting power as to 1,004,809 shares, shared voting power as to 1,999 shares,
sole investment power as to 1,033,184 shares, and shared investment power as to
4,224 shares.
J. P. Morgan & Co. Incorporated, 60 Wall Street, New York, NY 10260, has
informed the Company that, as of February 22, 1994, it beneficially owned
8,205,514 shares, or approximately 5.8%, of the outstanding Common Stock, with
sole voting power as to 4,434,007 shares, shared voting power as to 161,558
shares, sole investment power as to 8,033,506 shares and shared investment power
as to 167,908 shares.
10
<PAGE>
Set forth below is certain information with respect to beneficial ownership
of the Common Stock as of February 22, 1994 by each director, certain executive
officers and by all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Number of
Name Shares(1)(2)
- --------------------------------------------------------- --------------
<S> <C>
John W. Barter........................................... 141,899(3)(4)
Hans W. Becherer......................................... 1,500
Lawrence A. Bossidy...................................... 254,827(3)(4)
Daniel P. Burnham........................................ 134,918(3)
Jewel Plummer Cobb....................................... 2,570(4)
Eugene E. Covert......................................... 1,885
Ann M. Fudge............................................. 1,500
William R. Haselton...................................... 2,364(4)
Paul X. Kelley........................................... 2,208(4)
Robert D. Kilpatrick..................................... 2,800(5)
Robert P. Luciano........................................ 2,000
Russell E. Palmer........................................ 2,000
Frederic M. Poses........................................ 167,799(3)(4)
Ralph E. Reins........................................... 64,958(3)
Andrew C. Sigler......................................... 2,500(6)
John R. Stafford......................................... 2,000
Thomas P. Stafford....................................... 1,500
Delbert C. Staley........................................ 1,993
Robert C. Winters........................................ 5,059
All directors and executive officers as a group,
including the above (31 in number)..................... 1,320,040(3)(4)
</TABLE>
- ------------
(1) The total for each individual is less than 0.2%, and the total for the group
is less than 1%, of the shares of Common Stock outstanding.
(2) Includes shares held individually, jointly with others or in the name of a
bank, broker or nominee for the individual's account, as well as shares
attributable to participants under the dividend reinvestment and savings
plans. Also includes restricted shares as to which directors have sole
voting power but no investment power prior to the lapse of restrictions.
(3) Includes shares which the following have the right to acquire within 60 days
through the exercise of vested employee stock options: Mr. Barter, 135,368;
Mr. Bossidy, 165,000; Mr. Burnham, 121,685; Mr. Poses, 157,133; Mr. Reins,
59,595; and all executive officers as a group, 1,111,339. No voting or
investment power exists with respect to such shares prior to acquisition.
(4) Does not include the following amounts credited to deferred share accounts,
as to which no voting or investment power exists prior to issuance: Mr.
Barter, 3,208; Mr. Bossidy, 55,220; Dr. Cobb, 2,844; Mr. Haselton, 2,951;
Gen. Kelley, 1,796; Mr. Poses, 5,241; and all directors and executive
officers as a group, 79,753.
11
<PAGE>
(5) Includes 1,300 shares owned by Mr. Kilpatrick's wife. Mr. Kilpatrick
disclaims beneficial ownership of these shares.
(6) As of March 4, 1994.
------------------
The Company is required to identify any director or officer who failed to
timely file with the Securities and Exchange Commission a required report
relating to ownership and changes in ownership of the Company's equity
securities. Based on material provided to the Company, two reports covering a
total of four purchases were inadvertently filed late by Mr. Winters during
1993.
EXECUTIVE COMPENSATION
Report of the Management Development and Compensation Committee
The Management Development and Compensation Committee of the Board of
Directors (the 'Committee'), subject to the approval of the Board of Directors,
determines the compensation of the Company's executive officers and oversees the
administration of executive compensation programs. The Committee is composed
solely of independent directors.
Executive Compensation Policies and Programs
The Company's executive compensation programs are designed to attract and
retain highly qualified executives and to motivate them to maximize shareowner
returns by achieving aggressive goals. The programs link each executive's
compensation directly to performance. A significant portion of each executive's
compensation is dependent upon the appreciation of the Common Stock and meeting
financial goals and other individual performance objectives.
There are three basic components to this 'pay for performance' system: base
pay; annual incentive bonus; and long-term, equity-based incentive compensation
(primarily stock options). Each component is addressed in the context of
competitive conditions. In determining competitive compensation levels, the
Company analyzes information from several independent surveys which include
information regarding comparably-sized industrial companies. Since the Company's
market for executive talent extends beyond its own industries, the survey data
include companies outside the industrial classifications represented in the
Composite Group Index referred to below under 'Performance Graph.'
Base pay. Base pay is competitive within 20% above or below median salary
levels at other large industrial companies for equivalent positions. The
executive's actual salary within this competitive framework will vary based on
individual performance (measured as described in the next paragraph), tenure and
the individual's salary compared to competitive salary levels.
Annual incentive bonus. In 1993, each executive was eligible to receive an
annual cash bonus. The 'target' level for that bonus, like the base salary
level, was set with reference to competitive conditions. These target levels,
which were somewhat above median levels, were intended to motivate the
Company's executives by providing substantial bonus payments for the
achievement of aggressive goals. The actual amount paid was determined by
performance.
12
<PAGE>
Whether that payment was above or below target depended on two factors:
first, financial performance, which was measured against objectives such as
net income, earnings per share, return on equity, cash flow, productivity
increases and working capital turns; and second, the individual executive's
performance against other specific management objectives such as improving
customer satisfaction or negotiating strategic business alliances.
Financial objectives were given greater weight than other management
objectives in determining bonus payments. The types and relative importance of
specific financial and other business objectives varied among the Company's
executives depending on their positions and the particular operations or
functions for which they were responsible.
Long-term, equity-based incentive compensation. The long-term, equity-based
compensation program is tied directly to shareowner return. The executive is
rewarded if the shareowners receive the benefit of appreciation in the price of
the Common Stock. Under the program, long-term incentive compensation has
consisted of stock options and restricted stock units. Since long-term awards
vest over time, the Company periodically grants new awards to provide continuing
incentives for future performance, without regard to the number of outstanding
awards. Like the annual bonus, the target award is set with regard to
competitive considerations, but each individual's actual award is based upon
performance measured against the criteria described in the preceding paragraph
and the individual's leadership in the Company's total quality program and
potential for future contributions.
The principal purpose of the long-term incentive compensation program is to
encourage the Company's executives to enhance the value of the Company and,
hence, the price of the Common Stock and the shareowners' return. In addition,
this component of the compensation system (through deferred vesting) is designed
to create an incentive for the individual to remain with the Company. In order
to enhance the retention incentive in connection with the hiring of new
executives, long-term awards occasionally have been made which vest over periods
longer than the customary three or four years for options and restricted stock
units, respectively.
In order to align more closely the interests of the Company's executives
with those of its shareowners, the Committee has been phasing out the use of
restricted stock units and will not make annual unit grants as part of the
long-term program after 1994. The Committee expects that in the future units
will be granted only in special situations to a limited number of executives,
primarily as a retention incentive.
Employee linkage to shareowner interests is further buttressed through
ownership of about 14% of the outstanding Common Stock under the Company's
savings plans.
Deductibility
The Company intends, to the extent practicable, to preserve deductibility
under the Internal Revenue Code (the 'Code') of compensation paid to its
executive officers while maintaining compensation programs to attract and retain
highly qualified executives in a competitive environment. Accordingly,
amendments are being proposed to the Company's 1993 Stock Plan and Incentive
Compensation Plan to allow compensation generally paid thereunder to be
deductible under recent revisions to the Code, although certain compensation
paid to some executives may not be deductible. (See 'Plan Amendments to Preserve
Tax Deductibility.')
13
<PAGE>
Annual Reviews
Each year, the Committee reviews the executive compensation policies with
respect to the linkage between executive compensation and the creation of
shareowner value, as well as the competitiveness of the programs. The Committee
determines what changes, if any, are appropriate in the compensation programs.
As noted above, the Committee determined to discontinue annual grants of
restricted stock units for years following 1994. In conducting this annual
review, the Committee considers information provided by the Chief Executive
Officer and the Senior Vice President-Human Resources and uses surveys and
reports prepared by independent compensation consultants.
The Committee annually reviews with the Chief Executive Officer the
individual performance of each of the other executive officers and the Chief
Executive Officer's recommendations with respect to the appropriate compensation
awards. With Board authorization, the Committee approves salary actions and
determines the amount of annual bonus and the number of long-term, equity-based
awards for each officer. The Committee also reviews with the Chief Executive
Officer the financial and other objectives for each of the senior executive
officers for the following year.
In 1993, awards to executive officers as a group reflected the overall
financial performance of the Company, which, despite a continuing weak economy,
represented substantially improved income from operations and net income and
achievement of the Company's operating earnings per share goals, as well as
improved productivity and working capital turns. Awards to individuals also
reflected performance against their specific management objectives.
Chief Executive Officer
In reviewing Mr. Bossidy's performance, the Committee focused primarily on
the Company's performance in 1993, which reflected sustained improvement since
Mr. Bossidy became Chief Executive Officer and which significantly exceeded 1992
performance, with substantial improvement in net income, operating earnings per
share and return on equity. The Committee also considered Mr. Bossidy's
contributions to various long-term initiatives, including enhancement of the
Company's total quality program, which is designed to substantially increase
customer satisfaction by continuously improving work processes. In light of
these results, Mr. Bossidy was awarded an annual incentive bonus for 1993 of
$1,500,000, which was higher than his minimum target bonus of 80% of base
salary, primarily reflecting the Company's improved performance. Mr. Bossidy's
base salary, last increased in late 1992, remained unchanged during 1993. It is
above the median but within the range discussed above for all executives. The
Committee in 1993 awarded Mr. Bossidy the same number of stock options as in
1992 and, as part of its phaseout of annual restricted stock unit grants,
reduced the number of units awarded to him.
------------------
Members of the Management Development and Compensation Committee:
<TABLE>
<S> <C>
Delbert C. Staley, Chairman Robert P. Luciano
William R. Haselton John R. Stafford
Robert D. Kilpatrick Robert C. Winters
</TABLE>
14
<PAGE>
Summary Compensation Table
The following table contains information concerning the most highly
compensated executive officers of the Company, as required under applicable
rules of the Securities and Exchange Commission.
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Name and Securities
Principal Other Annual Restricted Underlying All Other
Position Year Salary Bonus Compensation Unit Awards(1) Options(#) Compensation(2)
- ----------------- ------- ----------- ----------- ------------ -------------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence A. 1993 $ 1,100,000 $ 1,500,000 $ 68,698 (3) $ 343,450 150,000 $ 412,590
Bossidy 1992 1,016,667 1,250,000 53,544 (3) 459,900 150,000 388,512
Chairman of the 1991 500,000 300,000 -- 10,157,816 250,000 --
Board and Chief (6
Executive mos.)
Officer
Alan Belzer(4) 1993 765,000 775,000 -- 180,998 83,000 175,650
President and 1992 758,333 670,000 -- 273,750 82,000 175,118
Chief Operating 1991 697,813 400,000 -- 402,500 75,000 --
Officer
Daniel P. Burnham 1993 392,500 340,000 39,225 141,707 65,000 320,610
Executive Vice 1992 375,000 290,000 27,455 208,050 62,325 151,222
President 1991 295,002 180,000 -- 220,938 67,500 --
(Aerospace)
Frederic M. Poses 1993 430,000 425,000 -- 141,707 65,000 53,709
Executive Vice 1992 410,000 370,000 -- 213,525 63,950 52,113
President 1991 360,938 225,000 -- 287,500 50,000 --
(Engineered
Materials)
Ralph E. Reins 1993 423,333 375,000 -- 130,854 60,000 65,348
Executive Vice 1992 399,996 350,000 -- 169,725 50,850 49,969
President 1991 48,717 200,000 -- 1,021,875 50,000 --
(Automotive) (2
mos.)
John W. Barter 1993 387,500 345,000 -- 91,564 42,000 47,287
Senior Vice 1992 370,000 300,000 -- 136,875 41,000 45,889
President and 1991 322,438 175,000 -- 172,500 30,000 --
Chief Financial
Officer
</TABLE>
- ------------
(1) Restricted unit awards, valued on the date of the award, entitle the holder
to receive one share of Common Stock for each unit when the unit vests. (A
portion of the unit may be paid in cash to cover applicable taxes.) As part
of his initial employment arrangements, Mr. Bossidy was granted 345,798
units in 1991, vesting over a period ending in the year 2000, to compensate
for the loss of long-term incentive awards from his previous employer. Of
those units, 121,030 vested in 1992, 51,870 vested in 1993, and 86,449 will
vest in each of January 1997 and 2000. Mr. Reins was awarded 25,000 units in
1991, of which 2,500 vested in each of 1992 and 1993, 2,500 will vest in
each of October 1994 and 1995, 3,750 in each of July 1995 and 1997, and
7,500 in July 2000. All other units reflected in the table vest in equal
annual installments on January 1 of each of the four years following the
award, except that all units granted to Mr. Belzer and outstanding at
December 30, 1993 vested on that date. The total number of units held and
their value at the end of 1993 were as follows: Mr. Bossidy,
15
<PAGE>
172,898 units reflecting the replacement of long-term incentive awards
forfeited from his prior employer ($13,658,942) and 11,300 units reflecting
other grants ($892,700), for a total of 184,198 units ($14,551,642); Mr.
Belzer, none; Mr. Burnham, 34,725 units ($2,743,275); Mr. Poses, 41,238
units ($3,257,802); Mr. Reins, 24,230 units ($1,914,170); and Mr. Barter,
32,958 units ($2,603,682). Common Stock dividend equivalents are paid on
each unit.
(2) Amounts shown for 1993 consist of matching contributions made by the Company
under the savings plan and supplemental savings plan: for Mr. Bossidy,
$43,807; Mr. Belzer, $61,200; Mr. Burnham, $31,404; Mr. Poses, $34,404; Mr.
Reins, $16,713; and Mr. Barter, $31,002; the value of life insurance
premiums: for Mr. Bossidy, $368,783; Mr. Belzer, $114,450; Mr. Burnham,
$37,145; Mr. Poses, $19,305; Mr. Reins, $28,635; and Mr. Barter, $16,285;
final settlement of relocation arrangements for Mr. Burnham, $252,061; and
defined contribution arrangements for Mr. Reins, $20,000.
(3) For 1993, includes $27,420 for estate planning and $20,143 for
Company-provided transportation; for 1992, includes $19,850 for financial
planning and $22,956 for Company-provided transportation.
(4) Mr. Belzer retired on December 31, 1993 (see 'Employment and Termination
Arrangements').
Option Tables
The following tables contain information concerning stock options.
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to Exercise Grant Date
Options Employees in Price Expiration Present
Name Granted(1) Fiscal Year ($/Sh) Date Value(2)
- ------------------------------------------ ---------- ------------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Lawrence A. Bossidy....................... 150,000 5.0 $ 68.69 3/24/03 $ 2,799,000
Alan Belzer............................... 83,000 2.8 68.69 3/24/03 1,548,780
Daniel P. Burnham......................... 65,000 2.2 68.69 3/24/03 1,212,900
Frederic M. Poses......................... 65,000 2.2 68.69 3/24/03 1,212,900
Ralph E. Reins............................ 60,000 2.0 68.69 3/24/03 1,119,600
John W. Barter............................ 42,000 1.4 68.69 3/24/03 783,720
</TABLE>
- ------------
(1) Options were granted with an exercise price of 100% of the fair market value
of the Common Stock on the date of grant, exercisable in cumulative
installments of 40% commencing on January 1, 1994 and 30% on each of January
1, 1995 and 1996. (See 'Employment and Termination Arrangements' for
information regarding the vesting of Mr. Belzer's options.) Limited stock
appreciation rights were granted in tandem with the options and would only
become exercisable for a period of 90 days following a tender offer for the
Company's shares, a change in control or similar events. The Committee has
discretion to grant, in exchange for the surrender of an outstanding option,
a new option with a price different from the surrendered option. Although
this authority, which has existed in the Company's option plans for many
years, could be used to effectively lower the exercise price of an
outstanding option, it has never been used and the Committee has no present
intention of doing so.
(2) Options are valued using a Black-Scholes-based formula. The formula assumes
historic five year average volatility and dividend yield, a 7% risk-free
return and a ten-year option period. No adjustments are made for risk of
forfeiture or non-transferability. Options will have no actual value unless,
and then only to the extent that, the Common Stock price appreciates from
the grant date to the exercise date. If the named officers realize the grant
date values, total shareowner value will have appreciated by approximately
$2.6 billion, and the value of the named officers' options will be 0.3% of
the total shareowner appreciation.
16
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
--------------------------
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired on Options at Year-End at Year-End
Exercise Value -------------------------- ---------------------------
Name (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence A. Bossidy....... 75,000 $2,815,650 60,000 390,000 $ 1,525,800 $ 11,372,700
Alan Belzer............... 83,342 2,970,318 335,000 0 10,678,265 0
Daniel P. Burnham......... 33,847 1,186,375 55,738 140,519 1,976,588 3,442,429
Frederic M. Poses......... 47,500 1,757,215 99,448 140,870 3,854,676 3,499,399
Ralph E. Reins............ 25,000 697,600 20,340 115,510 517,246 2,394,719
John W. Barter............ 17,500 697,690 91,268 89,100 3,755,598 2,172,198
</TABLE>
Performance Graph
The following graph compares the five-year cumulative total return on the
Common Stock to the total returns on the Standard & Poor's 500 Stock Index and a
composite index of corporations in the same industries as the Company (the
'Composite Group Index').
[PERFORMANCE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993
Company Common Stock 112.9 92.5 157.6 221.4 294.0
S&P 500 131.7 127.6 166.5 179.2 197.2
Composite Group 123.0 115.5 151.3 164.7 190.2
</TABLE>
In each case, a $100 investment on December 31, 1988 and reinvestment
of all dividends are assumed. Returns are at December 31 of each year.
17
<PAGE>
The Composite Group Index combines the total returns on the published Dow
Jones indices for the Aerospace & Defense, Automobile Parts & Equipment
Excluding Tire and Rubber Makers, and Chemical Groups. The total return for the
Composite Group Index is calculated by adding the products obtained from
separately multiplying the total return for each of the three Dow Jones groups
by the total market capitalization of the companies included in that group and
dividing by the total market capitalization of the companies included in the
three groups. This calculation is made for each year using stock market
capitalization data as of the beginning of the year provided to the Company by
Dow Jones. Shareowners may obtain this data from the Secretary, AlliedSignal
Inc., P.O. Box 4000, Morristown, New Jersey 07962.
Retirement Benefits
The following table illustrates the estimated annual pension benefits which
would be provided on retirement at age 65 under the Company's Retirement Program
(the 'Pension Plan') and an unfunded supplemental retirement plan (the
'Supplemental Plan'), after applicable deductions for Social Security benefits,
to salaried employees having specified average annual remuneration and years of
service.
PENSION TABLE
-------------
<TABLE>
<CAPTION>
Years of Service
---------------------------------------------------------------------------------
Remuneration 10 15 20 25 - 30 35 40
- ------------ -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 500,000 $ 91,191 $141,191 $ 191,191 $ 241,191 $ 259,320 $ 296,365
700,000 131,191 201,191 271,191 341,191 364,320 416,365
900,000 171,191 261,191 351,191 441,191 469,320 536,365
1,100,000 211,191 321,191 431,191 541,191 574,320 656,365
1,400,000 271,191 411,191 551,191 691,191 731,820 836,365
1,800,000 351,191 531,191 711,191 891,191 941,820 1,076,365
2,400,000 471,191 711,191 951,191 1,191,191 1,256,820 1,436,365
3,100,000 611,191 921,191 1,231,191 1,541,191 1,624,320 1,856,365
</TABLE>
The benefit amounts shown in the Pension Table are computed on a straight
life annuity basis. At January 1, 1994, the following individuals had the
indicated number of years of credited service for pension purposes: Mr. Bossidy,
2.6; Mr. Belzer, 37.92; Mr. Burnham, 11.67; Mr. Poses, 24.33; Mr. Reins, 2.08;
and Mr. Barter, 17.83.
The amounts in the Salary and Bonus columns of the Summary Compensation
Table for 1993 would be included in computing remuneration for pension purposes.
Remuneration under the Pension Plan is calculated based on the highest paid 60
consecutive months of an employee's last 120 months of employment. Pursuant to
an agreement with the Company, Mr. Belzer's retirement benefit will be
calculated on the basis of his highest three years of salary and bonus, whether
or not consecutive.
Under his employment agreement, Mr. Bossidy is entitled to receive a
retirement benefit, commencing at age 62 or later termination of employment,
equivalent to 60% of his final average compensation (based on his highest three
years of salary and bonus) payable annually for his
18
<PAGE>
lifetime, and 30% of his final average compensation payable annually thereafter
to his surviving spouse for her lifetime. If Mr. Bossidy dies prior to
retirement, a benefit equivalent to 30% of his final average compensation will
be paid for his surviving spouse's lifetime. Benefits under the agreement will
be reduced for retirement before age 62 and by any retirement benefits payable
under the Pension Plan and Supplemental Plan, any survivor benefit payable under
the Company's executive life insurance program and, under certain circumstances,
benefits payable under pension plans of his former employer.
Employment and Termination Arrangements
Mr. Bossidy has an agreement with the Company which provides for his
employment until at least June 1996 at a minimum salary of $1,000,000 per year
and a target annual incentive bonus of at least 80% of salary. The Company's
contractual obligations to make specific stock option and restricted unit awards
have been fulfilled and are reflected in the Summary Compensation Table. Under
the agreement, the Company will provide benefits on retirement which are
described under 'Retirement Benefits,' and the Company assumed obligations for
certain life insurance policies. The Company will be reimbursed from the
proceeds of the policies for premiums it pays. The value of these premiums is
reflected in the Summary Compensation Table.
Under the Severance Plan for Senior Executives (the 'Plan'), the executives
named in the Summary Compensation Table would be entitled to payments equivalent
to base salary and annual incentive bonus (and continuation of certain benefits,
such as group life and medical insurance coverage) for a period of 36 months (or
a lump sum payment following a change in control) if their employment is
terminated other than for 'gross cause' (which includes fraud and criminal
conduct). Payments would not continue after an executive reaches age 65. The
Plan provides for an additional payment sufficient to eliminate the effect of
any applicable excise tax on severance payments in excess of an amount
determined under Section 280G of the Internal Revenue Code. Payments subject to
the excise tax would not be deductible by the Company.
Under the Plan, Mr. Belzer will receive an annual amount through 1996
equivalent to the salary included in the Summary Compensation Table for 1993
plus 75% thereof representing his target level incentive bonus. As permitted
under stock plan provisions, the payment of 55,260 outstanding restricted units
(for which he received $2,206,946 and 27,630 shares of Common Stock) and the
vesting of 188,450 outstanding stock options were accelerated to year-end.
PLAN AMENDMENTS TO PRESERVE TAX DEDUCTIBILITY
Under the Omnibus Budget Reconciliation Act of 1993 ('OBRA'), the Internal
Revenue Code (the 'Code') was amended to limit to $1,000,000 per person, with
certain exceptions, the allowable deduction by a public corporation for
compensation which is paid or accrued with respect to its chief executive
officer and next four highest paid executive officers. Proposed regulations
interpreting OBRA have been issued by the Internal Revenue Service. Based on the
Company's review of OBRA and interpretation of the regulations, the Board of
Directors is proposing amendments to the 1993 Stock Plan and the Incentive
Compensation Plan in order to allow compensation paid thereunder to be
deductible.
19
<PAGE>
2 -- AMENDMENT OF 1993 STOCK PLAN
At the 1993 Annual Meeting, shareowners approved the 1993 Stock Plan for
Employees of AlliedSignal Inc. and its Affiliates (the 'Stock Plan'). The Stock
Plan limits the number of shares of Common Stock which may be subject to grant
to all employees in any one year. In order to meet OBRA requirements with
respect to grants of stock options, stock appreciation rights and limited stock
appreciation rights (collectively, 'grants'), the Board of Directors is
recommending that the shareowners approve an amendment to the Stock Plan
imposing limitations on the number of shares of Common Stock subject to grants
made to any individual employee. The amended Stock Plan would provide that no
employee may receive grants with respect to more than 1,500,000 shares (750,000
shares on a pre-split basis) over any three-year period.
Currently, grants under the Stock Plan are not transferable. However, in
order to facilitate employees' estate planning, the Stock Plan also would be
amended to permit the grant of options which would be transferable only to
members of an employee's immediate family, including trusts and certain
partnerships which are solely for the benefit of such family members.
The primary features of the amended Stock Plan are summarized below. The
summary is qualified in its entirety by reference to the specific provisions of
the amended Stock Plan, the full text of which is set forth as Exhibit A to this
Proxy Statement.
Plan Summary and Other Information
Form of Awards. Awards may be granted in the form of non-qualified stock
options, incentive stock options within the meaning of the Code, shares of
Common Stock, shares of Common Stock with certain restrictions ('restricted
shares'), restricted units representing Common Stock equivalents ('restricted
units'), stock appreciation rights ('rights') or limited stock appreciation
rights ('limited rights'). Awards may provide for dividends, dividend
equivalents or notional interest. Shares utilized under the Stock Plan may be
either authorized but unissued shares or issued shares reacquired by the
Company.
Number of Awards. The Stock Plan provides for the annual grant of awards in
an amount not in excess of 1.5% of the shares of Common Stock issued on December
31 of the immediately preceding year. Shares available for awards in any year
that are not utilized will be available for use in subsequent years. On that
basis, awards could be made in 1994 with respect to approximately 5,400,000
shares (2,700,000 shares on a pre-split basis), based on the number of shares
issued at year end, plus approximately 4,400,000 shares (2,200,000 shares on a
pre-split basis), the number of shares remaining available following 1993
awards. Within the total number of shares available for awards in any year, not
more than 1,700,000 shares (850,000 shares on a pre-split basis) may be subject
to grants of incentive stock options. Further, the number of shares that may be
utilized for grants of shares, restricted shares or restricted units may not
exceed 10% of the shares available annually for awards under the Stock Plan
(plus those unused for such grants in prior years). In addition, no individual
employee may receive grants of options, rights, limited rights or any
combination thereof under the Stock Plan with respect to more than 1,500,000
shares (750,000 shares on a pre-split basis) over any three-year period.
20
<PAGE>
Duration. The Stock Plan will remain in effect through April 25, 2003,
unless terminated sooner by the Board of Directors.
Administration. The Stock Plan is administered by the Management
Development and Compensation Committee of the Board of Directors (the
'Committee'). The Committee is composed of independent directors who are not
eligible to participate in the Stock Plan. Among other things, the Committee has
authority to determine the employees to whom awards will be granted, the types
of awards, restrictions applicable to grants of restricted shares and restricted
units and to interpret the Stock Plan.
Eligibility. All employees who are regular full-time employees of the
Company or its affiliates are eligible to receive awards. It is presently
contemplated that awards will be made each year to officers and other executive
employees of the Company. There are currently approximately 765 executive
employees, including 17 executive officers. It is also contemplated that awards
to high performance non-executive employees will be made from time to time as
management deems appropriate. No determination has been made as to the types or
amounts of awards that will be granted in the future to specific individuals
under the Stock Plan. (See the Summary Compensation Table and Option Grants in
Last Fiscal Year for information relating to prior awards to named executive
officers.)
Term of Options. At the time of grant, the Committee determines the term of
the option, which in the case of an incentive stock option may not exceed ten
years.
Option Price. Options are priced at not less than 100% of the fair market
value of the Common Stock on the date of grant. Fair market value is the mean
between the highest and lowest sales prices of the Common Stock as reported on
the New York Stock Exchange Composite Tape for the grant date. (The last sale
price of the Common Stock so reported for February 28, 1994 was $76 3/8 per
share.) Payment by an employee upon exercise of an option may be made in cash,
in already-owned shares of Common Stock or, if permitted by the Committee, by
surrender of outstanding awards under the Stock Plan.
Option Vesting. Unless otherwise provided, each option will become 100%
vested at the earliest of the employee's normal retirement date, death or total
disability or the passage of such period of time from the date of grant as the
Committee shall determine. Prior to becoming 100% vested, each option generally
becomes exercisable in cumulative installments as established by the Committee
at the time of grant. Such installments are subject to acceleration at any time
by the Committee as well as under certain circumstances described in the Stock
Plan, including the purchase of shares of Common Stock pursuant to a tender
offer or exchange offer, a change in control, or a merger in which the Company
does not survive as an independent, publicly-owned corporation (an 'Acceleration
Event').
Rights. Rights provide that an employee is entitled to receive the excess
of the fair market value of a specified number of shares over the exercise price
applicable to the right. Upon exercise, payment will be made in the form of all
cash, all shares of Common Stock or a combination thereof, as determined by the
Committee.
Limited Rights. Following an Acceleration Event, limited rights provide for
a cash payment to the employee, calculated under the applicable Stock Plan
formula relating to the Acceleration
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Event. The cash payment is designed to provide the employee with an economic
benefit comparable to that available to all shareowners in connection with the
Acceleration Event.
Restricted Shares and Restricted Units. Restrictions applicable to
restricted shares or restricted units may be time- or performance-based. The
Committee has the discretion to accelerate the lapse of restrictions at any
time. Restrictions will lapse upon the employee's death or total disability or
upon an Acceleration Event. If the employee remains an employee until the lapse
of restrictions, the employee will receive one share of Common Stock for each
restricted unit with respect to which the restrictions lapsed (or, in the
Committee's discretion, the cash equivalent for all or part of such units). The
Committee may defer such payments; those deferred in stock may bear dividend
equivalents and those deferred in cash may bear notional interest. Upon an
Acceleration Event, the employee will be entitled to a lump sum cash payment for
the employee's restricted units, calculated under the applicable Stock Plan
formula relating to the Acceleration Event.
Certain Federal Tax Consequences. The following statements are based on
current interpretations of existing federal income tax law. The law is technical
and complex and the statements represent only a general summary of some of the
applicable provisions.
If the shareowners approve the amended Stock Plan, the Company believes
that under OBRA it will be entitled to a deduction for all compensation
attributable to an employee's exercise of non-qualified options and rights.
Compensation with respect to limited rights, which is payable following an
Acceleration Event, may not be deductible. In addition, a portion of the
compensation attributable to restricted units and restricted stock may not be
deductible. However, as discussed above in the 'Report of the Management
Development and Compensation Committee,' the Committee has determined to
discontinue annual grants of units for years after 1994.
The following two paragraphs set forth federal tax consequences to the
employee and the Company on the grant and exercise of an option.
Non-qualified Options. While there are no federal income tax consequences
to either the employee or the Company on the grant of an option, the employee
will have taxable ordinary income on the exercise of a non-qualified option
equal to the excess of the fair market value of the shares on the exercise date
over the option price and, as noted above, the Company is entitled to a
corresponding deduction.
Incentive Stock Options. The Code limits to $100,000 the value of employer
stock subject to incentive stock options that first become exercisable in any
one year, based on the fair market value of the stock at the date of grant. Upon
exercise, an optionee will not realize taxable income (except that the
alternative minimum tax may apply) and the Company will not be entitled to any
deduction. If the optionee sells the shares more than two years after the grant
date and more than one year after exercise, the entire gain, if any, realized
upon the sale will be taxable to the optionee as long-term capital gain and the
Company will not be entitled to a corresponding deduction. If the optionee does
not satisfy the holding period requirements, the optionee will realize ordinary
income, in most cases equal to the difference between the option price of the
shares and the lesser of the fair market value of the shares on the exercise
date or the amount
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realized on a sale or exchange of the shares, and the Company will be entitled
to a corresponding deduction.
Termination of Employment, Death or Total Disability. Upon termination of
employment for cause, all options held by the employee will terminate. Vested
options may be exercised at any time within three years after any other
involuntary termination and within three months after voluntary termination, but
in no event after the expiration date of the option. In the case of retirement,
an option may be exercised for the lesser of the remainder of the option term or
ten years. If death or total disability occurs during any such period following
termination, vested options may be exercised for the greater of one year or the
remainder of the applicable period. In the case of death or total disability of
an employee while employed, options may be exercised during the remainder of the
option term.
Unless the Committee determines otherwise, an employee will forfeit all
rights in restricted shares and restricted units upon termination of employment
prior to the lapse of restrictions, except by reason of death or total
disability.
Transferability. Generally, options, restricted shares and restricted units
are not transferable during an employee's lifetime. As noted above, the
Committee may grant options which would be transferable to members of an
employee's immediate family, including trusts for the benefit of such family
members and partnerships in which such family members are the only partners.
Adjustments. The Committee may make such adjustments to outstanding awards
(including the exercise price of options), to the number of shares as to which
awards may be granted (i) to any employee over any three-year period, (ii) to
all employees through April 25, 2003 and (iii) as incentive stock options in any
year, as it deems appropriate or equitable in the event of distributions to
holders of Common Stock, stock splits, recapitalizations or other changes in the
outstanding Common Stock or in the event of mergers, acquisitions and certain
other transactions. The number of shares available for award will not be
decreased by any awards made and any shares delivered under the Stock Plan upon
the assumption of or in substitution for outstanding awards made by an entity
acquired by the Company (unless such awards are made to individuals who upon the
acquisition become subject to Section 16(b) of the Securities Exchange Act of
1934).
Termination and Amendment. The Board of Directors may suspend, terminate,
modify or amend the Stock Plan; provided, however, that any amendment that would
materially increase the aggregate number of shares which may be issued,
materially increase the benefits accruing to participants, or materially modify
the requirements as to eligibility for participation, will be subject to
shareowner approval.
Requisite Vote. The affirmative vote of a majority of the shares of Common
Stock present or represented and entitled to vote on the proposal at the Annual
Meeting is required for approval of the amended Stock Plan. If the shareowners
do not approve the amended Stock Plan, the Stock Plan in its current form will
remain in effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREOWNERS VOTE FOR THE
APPROVAL OF THE AMENDED 1993 STOCK PLAN.
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3 -- AMENDMENT OF INCENTIVE COMPENSATION PLAN
At the 1992 Annual Meeting, shareowners approved the AlliedSignal Inc.
Incentive Compensation Plan for Executive Employees (the 'Incentive Plan'). The
Incentive Plan has been administered by the Committee as described above under
'Annual incentive bonus' in the 'Report of the Management Development and
Compensation Committee.' In order to meet requirements set forth in regulations
proposed under OBRA with respect to annual cash bonuses, the Board of Directors
is recommending amendments to the Incentive Plan which would further define and
limit amounts which may be paid in the aggregate to the Company's senior
executive employees and on an individual basis to any employee.
As amended, the Incentive Plan would establish a performance goal
prohibiting the payment of any annual bonuses to senior executive employees
unless there are positive 'Consolidated Earnings' (as defined in the Plan) for
the year for which the bonuses are paid. The maximum amount that may be credited
to the fund from which bonuses are paid to senior executive employees (the
'Reserve') is 2% of Consolidated Earnings. The maximum bonus which might be
payable to an individual who is Chief Executive Officer during any part of the
year and to each other eligible employee would be limited to 0.4% and 0.2%,
respectively, of Consolidated Earnings for such year. Amounts remaining in the
Reserve may be allocated by the Committee among all other senior executive
employees. The Committee would exercise discretion within the above maximums in
determining the amount of individual awards and is expected to utilize the
criteria set forth above under 'Annual incentive bonus' in the 'Report of the
Management Development and Compensation Committee' in doing so.
As proposed, 'Consolidated Earnings' would be modified to mean consolidated
net income for the year for which a bonus is paid, as shown on the audited
consolidated statement of income of the Company, adjusted to omit the effects of
extraordinary items, gain or loss on the disposal of a business segment (other
than provisions for operating losses or income during the phase-out period),
unusual or infrequently occurring events and transactions and the cumulative
effects of changes in accounting principles, all as determined in accordance
with generally accepted accounting principles. The modified definition
specifically identifies the adjustments to be made and eliminates the existing
discretion of the Board of Directors and the Committee to make any further
adjustments.
Other amendments would eliminate an existing provision which allows the
carryforward of any balance remaining in the Reserve for future awards and would
limit the accrual of notional interest on deferred awards to a rate not more
than the greater of 10% or twice the 10-year U.S. Treasury Bond Rate at the time
the rate is determined, with interest compounded daily.
The primary features of the amended Incentive Plan are summarized below.
The summary is qualified in its entirety by reference to the specific provisions
of the amended Incentive Plan, the full text of which is set forth as Exhibit B
to this Proxy Statement.
Plan Summary and Other Information
Administration. The Incentive Plan is administered by the Committee, which
is composed of independent directors who are not eligible to participate in the
Incentive Plan.
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<PAGE>
Eligibility. The Incentive Plan defines eligible employees as those
Executive Employees of the Company or its subsidiaries who by reason of their
job responsibilities are in a position to make a measurable contribution to the
achievement of corporate objectives. The Incentive Plan also includes a
definition of Senior Executive Employees, a smaller group of eligible employees
consisting of officers of the Company and any other senior-level executive
employees who by reason of job responsibilities have been determined by the
Committee to be in a position to make a significant contribution to the
attainment of corporate objectives.
Amounts Available for Awards. No amount may be credited to the Reserve for
any year unless there are Consolidated Earnings (as described above) for that
year. The maximum amount that may be credited to the Reserve for any year is 2%
of Consolidated Earnings. Following receipt of a report from the Company's
independent accountants of such maximum amount, the Board of Directors will
determine the amount to be credited to the Reserve for that year. The maximum
aggregate amount of long-term awards to Senior Executive Employees and of short-
and long-term awards to Executive Employees will be determined by the Committee
and is not chargeable against the Reserve.
Award Recipients and Amounts. The Senior Executive Employees to whom awards
will be made, and the aggregate amounts of their individual short-term awards
(limited by the amount credited to the Reserve at the time of the awards) and
long-term awards (limited by the Committee's determination of the maximum amount
available for such awards), will be determined by the Committee, taking into
consideration the recommendations of the Chief Executive Officer, the employee's
contribution to the achievement of the Company's objectives and such other
matters as the Committee deems relevant. The maximum short-term award that may
be payable for any year to an individual who is Chief Executive Officer during
any part of the year and to each other eligible employee would be 0.4% and 0.2%,
respectively, of Consolidated Earnings. Amounts remaining in the Reserve may be
allocated by the Committee among all other Senior Executive Employees. The
Executive Employees to whom awards will be made, and the amounts of their
individual short-and long-term awards (limited by the Committee's determination
of the maximum amount available for such awards), will be determined by the
Chief Executive Officer. Long-term performance periods would cover more than one
fiscal year. Awards may be made to employees who retired or whose employment
terminated during the fiscal year or other performance period or to the designee
or estate of any employee who died during the period.
Form and Payment of Awards. All awards will be in cash and will be paid
currently, unless the Committee determines to defer any award. Deferred awards
may be paid in one lump sum or in installments and may accrue notional interest
(at a rate described above), all as the Committee determines.
Accelerated Payment. The Incentive Plan provides that payment of awards
will be accelerated under certain circumstances, including the purchase of
shares pursuant to a tender offer or exchange offer (other than an offer by the
Company) for the Common Stock, the acquisition by another entity of 30% or more
of the Common Stock, a merger in which the Company will not survive as an
independent publicly-owned corporation, or other similar events (a 'change in
control'). In the event of such an acceleration, the amount of the payment would
25
<PAGE>
be based on the maximum award that would have been paid if the objectives
established for the applicable performance period had been met, pro-rated on the
basis of the completed portion of the period. The Incentive Plan also provides
that at the time an employee requests the Committee to defer an award, the
employee may elect that the deferred award and any notional interest accrued
thereon be paid in a lump sum following a change in control.
Special Awards and Other Plans. Special recognition and performance awards
not chargeable against the Reserve may be made from time to time. In addition,
the Company and its subsidiaries may provide other incentive compensation plans
providing for the payment of incentive compensation to employees, including
officers and any other Senior Executive Employees, not chargeable against the
Reserve.
Amendment. The Board of Directors, with the prior approval of the
Committee, shall have the right to amend the Incentive Plan, including any
amendment that would increase the maximum amount that may be credited to the
Reserve or that would otherwise increase the cost of the Incentive Plan to the
Company. However, with respect to short-term awards for the Chief Executive
Officer and the next four highest paid officers, any amendment to change the
performance goal based on Consolidated Earnings, to change the maximum
short-term award, to change the maximum interest rate on deferred awards or to
change the definition of Consolidated Earnings will be subject to shareowner
approval. The Board may also repeal the Incentive Plan or direct the
discontinuance of awards on a temporary or permanent basis.
Federal Income Tax Consequences. Based on the Company's interpretation of
existing federal tax law, including the proposed regulations under OBRA,
short-term awards will be deductible by the Company while a portion of long-term
awards (of which none are currently outstanding) may be non-deductible in the
year in which the award is paid. In each instance, the award would be taxable to
the employee in such year. In addition, payments with respect to awards
accelerated because of a change in control may in certain circumstances be
subject to an excise tax imposed on the employee and, with respect to awards
which otherwise would be deductible, may become non-deductible to the Company.
Participating Employees. Approximately 17 Senior Executive Employees and
111 Executive Employees are currently eligible for awards under the Incentive
Plan for 1994. However, no determination has been made as to the amounts of
awards that will be granted to specific individuals in the future. (See the
Summary Compensation Table for information relating to prior awards to named
executive officers.) Other incentive compensation plans have been established on
a Company-wide or operating unit basis under which employees may receive awards
at the discretion of management. Generally, employees eligible for awards under
the Incentive Plan have not received awards under those other plans.
Requisite Vote. The affirmative vote of a majority of the shares of Common
Stock present or represented and entitled to vote on the proposal at the Annual
Meeting is required for approval of the amended Incentive Plan. If the
shareowners do not approve the amended Incentive Plan, the Incentive Plan in its
current form will remain in effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREOWNERS VOTE FOR THE
APPROVAL OF THE AMENDED INCENTIVE COMPENSATION PLAN.
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<PAGE>
4 -- AMENDMENT OF DIRECTORS' STOCK PLAN
The Restricted Stock Plan for Non-Employee Directors of AlliedSignal Inc.
(the 'Directors' Stock Plan') was approved by shareowners in 1985. The
Directors' Stock Plan currently provides for a one-time award of 1,500 shares
(3,000 shares following the Stock Split) of Common Stock (the 'restricted
shares') to each director who is not an officer or employee of the Company (a
'non-employee director'). A director who is at least 65 years old is entitled to
one-tenth of the shares awarded for each year of service, subject to the
restrictions described below. The Directors' Stock Plan has been in effect for
over eight years and the Board of Directors is recommending that the shareowners
approve amendments in order to modernize its provisions and enable the Company
to continue to attract and retain highly qualified directors and further align
the interests of the Company's directors with those of its shareowners.
The principal amendments to the Directors' Stock Plan would reduce by 50%
the number of restricted shares awarded to non-employee directors first elected
to the Board after April 25, 1994, shorten the vesting schedule for restricted
shares and provide for the annual grant of stock options. Other amendments would
impose a limit on the number of shares of Common Stock available for awards and
change the name of the Directors' Stock Plan to the 'Stock Plan for Non-Employee
Directors of AlliedSignal Inc.'
The primary features of the amended Directors' Stock Plan are summarized
below. The summary is qualified in its entirety by reference to the specific
provisions of the amended Directors' Stock Plan, the full text of which is set
forth as Exhibit C to this Proxy Statement.
Plan Summary and Other Information
Form of Awards. Awards shall be granted in the form of restricted shares
and non-qualified stock options. Shares utilized under the Directors' Stock Plan
may be either authorized but unissued shares or issued shares reacquired by the
Company.
Number of Awards. The maximum aggregate number of shares of Common Stock
available for awards is 225,000 shares.
Administration. The Directors' Stock Plan is administered by the Management
Development and Compensation Committee of the Board of Directors.
Eligibility and Awards. All current non-employee directors have received a
one-time award of 1,500 restricted shares (3,000 shares following the Stock
Split). Each new non-employee director elected after the 1994 Annual Meeting
will receive an award of 1,500 restricted shares on a post-split basis. Each
non-employee director continuing in office after an Annual Meeting will receive
a non-qualified stock option to purchase 1,000 shares of Common Stock on a post-
split basis.
Restrictions on Restricted Shares. A certificate for the restricted shares
is issued in the name of each non-employee director and held in custody by the
Company for the director's account. The director is not entitled to delivery of
the certificate and the shares will be subject to transfer restrictions for a
period (the 'Restricted Period') of six months from the date of award and until
the directors' service terminates with the consent of a majority of the other
members of the Board, provided termination occurs at or after age 65. Subject to
the foregoing restrictions,
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<PAGE>
the director has the rights and privileges of a shareowner, including the right
to receive dividends on and the right to vote the restricted shares.
Term of Options. Each option granted under the Directors' Stock Plan will
have a term of ten years.
Option Price. Options will be priced at 100% of the fair market value of
the Common Stock on the date of grant. Fair market value is the mean between the
highest and lowest sales prices of the Common Stock as reported on the New York
Stock Exchange Composite Tape for the grant date. (The last sale price of the
Common Stock so reported for February 28, 1994 was $76 3/8 per share.) Payment
by a non-employee director upon exercise of an option may be made in cash or in
already-owned shares of Common Stock.
Option Vesting. Each option shall become 100% vested at the earliest of the
non-employee director's retirement from the Board at or after age 70, death or
disability or on April 1 of the third year after the date of grant. Prior to
becoming 100% vested, each option becomes exercisable in cumulative installments
of 40% of the shares of Common Stock subject to the option on April 1 of the
year following the grant date and an additional 30% of the shares on April 1 of
each of the next two years.
Non-transferability of Options. Options are not transferable during a
non-employee director's lifetime.
Termination of Directorship. Vested options may be exercised within three
months after voluntary termination of service and for the remainder of the
option term in the case of retirement at or after age 70. If death or disability
occurs during such periods, vested options may be exercised for the greater of
one year or the remainder of the applicable period. In the case of death or
disability while serving on the Board, options may be exercised during the
remainder of the option term. Restricted shares will be forfeited if the
director's service terminates (other than for death or disability) prior to the
end of the Restricted Period. If the director remains a non-employee director
for the entire Restricted Period, the restrictions will lapse with respect to
one-fifth of the shares for each full year of service. Upon termination of
service due to death or disability, the former director or the director's estate
will receive all of his or her shares of Common Stock without restriction.
Adjustments in Event of Changes in Capitalization. In the event of a stock
split, recapitalization or other change in the corporate structure of the
Company or the Common Stock, the number of shares of Common Stock that may be
awarded under the Directors' Stock Plan and the number and class of shares that
may be awarded as restricted shares or options or that are subject to
outstanding awards, and the option price per share under outstanding options,
shall automatically be adjusted to prevent dilution or enlargement of rights.
Termination or Amendment. The Directors' Stock Plan may be terminated or
amended by the Board. However, no amendment may be made without the approval of
the Company's shareowners if shareowner approval is required by law or in order
to comply with Rule 16b-3 under Section 16 of the Securities Exchange Act of
1934, as amended from time to time. Amendments generally may not be made more
than once every six months.
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Certain Federal Income Tax Consequences. The following statements are based
on current interpretations of existing federal income tax law. The law is
technical and complex and the statements represent only a general summary of
some of the applicable provisions.
Options. While there are no federal income tax consequences to either the
director or the Company on the grant of an option, the director will have
taxable ordinary income on the exercise of a non-qualified option equal to the
excess of the fair market value of the shares on the exercise date over the
option price. The Company is entitled to a corresponding deduction.
Restricted Shares. Unless a director elects to be taxed at the time of
grant, the director will not realize taxable income, and the Company will not be
entitled to a deduction, until termination of the restrictions. Upon termination
of the restrictions, the director will realize taxable ordinary income in an
amount equal to the fair market value of the Common Stock at that time, and the
Company will be entitled to a deduction in the same amount. If a director elects
to be taxed at the time of grant, the director will realize taxable ordinary
income in an amount equal to the fair market value of the restricted shares at
that time, the Company will be entitled to a deduction in the same amount and
any gain or loss realized by the director upon disposition of the Common Stock
will be capital gain or loss.
The following table indicates the aggregate number of shares of Common
Stock underlying annual stock option grants to be made in 1994 to current
non-employee directors continuing in office after the Annual Meeting.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
NUMBER OF SHARES
GROUP UNDERLYING OPTION GRANTS
- ------------------------------------------------------------- ------------------------
<S> <C>
Non-Employee Directors (12 in number)........................ 12,000*
</TABLE>
- ------------
* Each new non-employee director elected after the 1994 Annual Meeting will
receive an award of 1,500 restricted shares on a post-split basis.
Requisite Vote. The affirmative vote of a majority of the shares of Common
Stock present or represented and entitled to vote on the proposal at the Annual
Meeting is required for approval of the amended Directors' Stock Plan. If the
shareowners do not approve the amended plan, the Directors' Stock Plan in its
current form will remain in effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREOWNERS VOTE FOR THE
APPROVAL OF THE AMENDED DIRECTORS' STOCK PLAN.
5 -- APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee, which is composed entirely
of independent directors, the Board of Directors has appointed Price Waterhouse
as independent accountants for the Company to audit its consolidated financial
statements for 1994 and to perform audit-related services, including review of
the Company's quarterly interim financial information and periodic reports and
registration statements filed with the Securities and
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Exchange Commission and consultation in connection with various accounting and
financial reporting matters. Price Waterhouse also performs non-audit services
for the Company.
The Board has directed that the appointment of Price Waterhouse be
submitted to the shareowners for approval. The affirmative vote of a majority of
the shares of Common Stock present or represented and entitled to vote on the
proposal at the Annual Meeting is required for approval. If the shareowners do
not approve, the Audit Committee and the Board will reconsider the appointment.
Price Waterhouse has audited the consolidated financial statements of the
Company and its predecessor, Allied Corporation, since 1969. Total fees for
services rendered by Price Waterhouse in 1993 to the Company and its
subsidiaries worldwide were approximately $12,300,000.
The Company has been advised by Price Waterhouse that it expects to have a
representative present at the Annual Meeting and that such representative will
be available to respond to appropriate questions. Such representative will also
have the opportunity to make a statement if he desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREOWNERS VOTE FOR THE
APPROVAL OF THE APPOINTMENT OF PRICE WATERHOUSE AS INDEPENDENT ACCOUNTANTS.
SHAREOWNER PROPOSALS
Shareowners have given the Corporation notice of their intention to
introduce the following proposals for consideration and action by the
shareowners at the Annual Meeting. The proposed resolutions and accompanying
statements have been provided by the respective proponents. For the reasons
stated, the Board of Directors does NOT support these proposals. The affirmative
vote of a majority of the shares of Common Stock present or represented and
entitled to vote on the proposals at the Annual Meeting is required for approval
of each proposal.
6 -- SHAREOWNER PROPOSAL REGARDING DIRECTORS' TENURE
This proposal has been submitted by Evelyn Y. Davis, Watergate Office
Building, 2600 Virginia Avenue, N.W., Suite 215, Washington, DC 20037, the owner
of 100 shares of Common Stock.
----------------------
'RESOLVED: That the stockholders of AlliedSignal recommend that the
Board take the necessary steps so that future outside directors shall not
serve for more than six years.'
'REASONS: The President of the U.S.A. has a term limit, so do
Governors of many states.
'Newer directors may bring in fresh outlooks and different approaches
with benefits to all shareholders.
'No director should be able to feel that his or her directorship is
until retirement.
'Last year the owners of 10,438,034 shares, representing approximately
10.7% of shares voting, voted FOR this proposal.
'If you AGREE, please mark your proxy FOR this resolution.'
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BOARD OF DIRECTORS' RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Board of Directors believes that familiarity with and understanding of
the Company achieved through continuity of service are assets which enhance
directors' contributions to the Company. Arbitrarily limiting directors' service
would deprive the Company of the insights directors have gained into the
Company's business, strategies and policies. Such a limitation could also
discourage desirable candidates from accepting nomination to the Board.
The peer review which is part of the nomination process assures that those
who are chosen to stand for re-election have made and can be expected to
continue to make significant contributions to the Company. The Board policy
governing directors' retirement (at age 70) and the Company's By-law providing
for a range in the number of directors between 13 and 23 assure ample
opportunity to add new directors with fresh ideas and outlooks and a variety of
experience and expertise. In fact, more than half of the Company's independent
directors joined the Board after 1986.
A similar proposal in 1993 was defeated by the holders of more than 89% of
the votes cast on the proposal, up from 84% in 1992. The Board believes the
shareowners should continue to oppose the proposal.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
7 -- SHAREOWNER PROPOSAL REGARDING EXECUTIVE COMPENSATION
This proposal has been submitted by Murray Katz and Beatrice M. Katz, 11435
Monterrey Drive, Silver Spring, Maryland 20902, the owners of 134 shares of
Common Stock.
-----------------------
'RESOLVED: That the shareholders of AlliedSignal Inc. recommend that
the Board of Directors institute a salary and compensation ceiling such
that as to future employment contracts, no senior executive officer or
director of the Company receive combined salary and other compensation
which is more than two times the salary provided to the President of the
United States, that is, no more than $400,000.'
'REASONS: There is no corporation which exceeds the size and
complexity of the United States government of which the President is the
chief executive officer. Even government agencies exceed the size, as
measured by personnel and budget, of most private corporations. The
President of the United States receives a salary of $200,000; even agency
heads and members of Congress are paid only somewhat more than $100,000.
The recommended ceiling is sufficient to motivate any person to do his
best.
'While the duties of the President of the United States are not
comparable to those of senior executive officers or directors (the
President has a much more demanding job) and while the President has many
valuable compensations which may exceed that of company executives, we use
the salary of the President only as a reference point for shareholders to
consider as they evaluate this resolution.
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'Officers and directors of public corporations are the employees and
not the owners, except as they may be shareholders in common with other
stockholders. Yet, they give the appearance that they run the corporations
primarily for their benefit and incidentally for the shareholders. The
Board of Directors, a closed group which perpetuates itself, determines who
is to be selected to the Board and who is to be an officer of the company,
as well as the compensation to be received. Directors and officers can run
the corporation as if it were their property. Thus, officers may drain away
millions in salary, stock options and other compensation. When the
recommended ceiling on salary and compensation is exceeded, it demonstrates
greed and abuse of power.
'Usually, there is no direct correlation between the profitability of
a corporation and the compensation to officers. In many corporations,
compensation increases even as profits fall. High compensation need not
serve as an incentive for a better run or more profitable corporation.
There is no shortage of qualified people who could do as good a job as the
incumbent officers of the Corporation and who would have no hesitation
serving within the aforementioned pay ceiling.
'Any officer who believes he can better the corporation should be
sufficiently motivated to purchase stock on the open market or to receive
stock options as part of his salary and compensation package. To remain
competitive in world markets we must cut our costs and not overcompensate
directors and officers.
'If you AGREE, please mark your proxy FOR this resolution.'
BOARD OF DIRECTORS' RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Board of Directors believes that establishment of a rigid and arbitrary
ceiling on compensation payable to the Company's senior executive officers and
directors would make it impossible for the Company to attract, motivate and
retain the highest quality executives and, thus, would not benefit the Company
or its shareowners.
As described above in the 'Report of the Management Development and
Compensation Committee,' the Company's executive compensation programs are
designed to attract and retain highly qualified executives and motivate them to
maximize shareowner returns. These programs, which have been developed in the
context of competitive conditions, link a significant portion of executive
compensation to performance and to appreciation in the price of the Common
Stock.
The Board of Directors is responsible to direct the management of the
Company's business and affairs in a manner it believes to be in the best
interests of the Company's shareowners. This responsibility extends to
significant executive compensation decisions. The Board believes the proposed
ceiling on compensation would unreasonably limit its ability to recognize and
reward individual performance based on such factors as individual and corporate
goals and performance, shareowner returns and industry conditions. This, in
turn, would place the Company at a severe competitive disadvantage compared to
companies not subject to the limitation.
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The Board believes that a realistic approach which allows compensation
levels to reflect performance factors and changing market conditions is crucial
to the Company's success and that the proposed ceiling would undermine the
effectiveness of the Company's compensation programs.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
ADDITIONAL INFORMATION
Other Action at the Meeting
The Board of Directors was not aware within a reasonable time before this
solicitation of any other matter to be presented for action at the Annual
Meeting. If any additional matters are properly presented, the shares
represented by a properly signed proxy card will be voted in accordance with the
judgment of the persons named on the proxy card.
Under the Company's By-laws, a shareowner of record entitled to vote at the
Annual Meeting who intends to make a nomination for the election of directors at
the meeting must give the Secretary of the Company written notice of such
intention in accordance with the prescribed procedure. In general, the By-law
procedure (the full provisions of which govern) requires that the notice be
received at the Company's headquarters not less than 30 nor more than 60 days
prior to the meeting and that it set forth the shareowner's name, address and
number of shares of Common Stock beneficially owned, together with information
about the candidate that would be required in a proxy statement and the
candidate's written consent to be nominated and to serve if elected. Nominations
not made in accordance with the procedure prescribed in the By-laws must be
disregarded.
Cost of Solicitation
The cost of solicitation will be borne by the Company. In addition to
solicitation by mail, directors, officers and other employees of the Company may
solicit proxies personally or by telephone or other means of communication. The
Company will also reimburse persons holding stock in their names or those of
their nominees for their reasonable expenses in sending proxy material to their
principals and obtaining their proxies. The Company has retained Morrow & Co.,
New York, New York, at an approximate total cost of $25,000, plus out-of-pocket
expenses, to assist in the solicitation of proxies by mail, personally or by
telephone or other means of communication.
Shareowner Proposals for 1995 Annual Meeting
Shareowners may submit proposals on matters appropriate for shareowner
action at the Company's annual meetings, consistent with regulations adopted by
the Securities and
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Exchange Commission. Proposals to be considered for inclusion in the Proxy
Statement for the 1995 Annual Meeting must be received by the Company not later
than November 10, 1994. Proposals should be directed to the attention of the
Secretary, AlliedSignal Inc., P.O. Box 4000, Morristown, New Jersey 07962.
---------------------------
Shareowners are urged to send in their proxies without delay.
By Order of the Board of Directors
ANDREW B. SAMET
Vice President, Secretary
and Associate General Counsel
March 10, 1994
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EXHIBIT A
1993 STOCK PLAN FOR
EMPLOYEES OF ALLIEDSIGNAL INC.
AND ITS AFFILIATES
(As amended effective as of January 1, 1994)
1. Purpose
AlliedSignal Inc. (the 'Company') desires to attract and retain the best
available talent and encourage the highest level of performance by employees in
order to serve the best interests of the Company and its shareowners. By
affording eligible employees the opportunity to acquire proprietary interests in
the Company and by providing them incentives to put forth maximum efforts for
the success of the Company's business, the 1993 Stock Plan for Employees of
AlliedSignal Inc. and its Affiliates (the '1993 Plan') is expected to contribute
to the attainment of those objectives.
2. Definitions
Acquisition Price per Share. The greater of (i) the highest price per Share
stated on the Schedule 13D or any amendment thereto filed by the holder of 20%
or more of the Company's voting power which gives rise to the conversion into
cash of a Limited Right or restricted Unit, and (ii) the highest Fair Market
Value per Share during the ninety-day period ending on the date a Limited Right
or restricted Unit is converted into cash.
Acquisition Spread. An amount equal to the product computed by multiplying
(i) the excess of (A) the Acquisition Price per Share over (B) the option price
per Share at which the related Stock Option is exercisable, by (ii) the number
of Shares with respect to which a Limited Right is being converted into cash.
Affiliate. Any parent, any subsidiary of which at least 50% of the
aggregate outstanding voting common stock or capital stock is owned directly or
indirectly by the Company and any other entity in which the Company has a
substantial ownership interest and which has been so designated by the Committee
in its sole discretion.
Change in Control. A 'Change in Control' is deemed to occur at the time
when any entity, person or group (other than the Company, any subsidiary, any
Section 16 Employee or group of Section 16 Employees, or any savings, pension or
other benefit plan for the benefit of employees of the Company or its
subsidiaries) which theretofore beneficially owned less than 30% of the Common
Stock then outstanding acquires Common Stock in a transaction or series of
transactions that results in such entity, person or group directly or indirectly
owning beneficially 30% or more of the outstanding Common Stock.
Committee. The Management Development and Compensation Committee of the
Board of Directors of the Company or any successor thereto.
Common Stock. The publicly traded common stock of the Company or any
successor.
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Dividend Equivalents. An amount equal to the cash dividends that would have
been paid with respect to an Award, if the Award constituted Common Stock, duly
issued and outstanding on the date on which a dividend is payable on the Common
Stock.
Fair Market Value. The mean between the highest and lowest sales prices of
a Share as reported on the New York Stock Exchange Composite Tape for the date
as to which a determination is to be made, or in the absence of reported sales
on that date, on the next preceding day on which there were reported sales.
Merger Price per Share. The greater of (i) the fixed or formula price for
the acquisition of Shares occurring pursuant to the event described in paragraph
12(a)(iii), if such fixed or formula price is determinable on the date on which
the Limited Right or restricted Unit is converted into cash, and (ii) the
highest Fair Market Value per Share during the ninety-day period ending on the
date on which the Limited Right or restricted Unit is converted into cash. Any
securities or property which are part or all of the consideration paid for
Shares pursuant to such event shall be valued in determining the Merger Price
per Share at the higher of (A) the valuation placed on such securities or
property by the corporation, person or other entity which is a party with the
Company to such event or (B) the valuation placed on such securities or property
by the Committee.
Merger Spread. An amount equal to the product computed by multiplying (i)
the excess of (A) the Merger Price per Share over (B) the option price per Share
at which the related Stock Option is exercisable, by (ii) the number of Shares
with respect to which a Limited Right is being converted into cash.
Offer Price per Share. The greater of (i) the highest price per Share paid
in any Offer (as defined in paragraph 12), which Offer is in effect at any time
during the ninety-day period ending on the date on which the Limited Right or
restricted Unit is converted into cash, or (ii) the highest Fair Market Value
per Share during such ninety-day period. Any securities or property which are
part or all of the consideration paid for Shares in the Offer shall be valued in
determining the Offer Price per Share at the higher of (A) the valuation placed
on such securities or property by the corporation, person or other entity making
such Offer or (B) the valuation placed on such securities or property by the
Committee.
Offer Spread. An amount equal to the product computed by multiplying (i)
the excess of (A) the Offer Price per Share over (B) the option price per Share
at which the related Stock Option is exercisable, by (ii) the number of Shares
with respect to which a Limited Right is being converted into cash.
Section 16 Employee. An employee of the Company or an Affiliate who is
subject to the provisions of Section 16 of the Securities Exchange Act of 1934.
Share. A share of the Common Stock.
Spread. An amount equal to the product computed by multiplying (i) the
excess of (A) the highest Fair Market Value per Share during the ninety-day
period ending on the date on which the Limited Right or restricted Unit is
converted into cash over (B) the option price per Share at which the related
Stock Option is exercisable, by (ii) the number of Shares with respect to which
the Limited Right is being converted into cash.
Total Disability. The permanent inability as a result of accident or
sickness to perform any and every duty pertaining to such employee's occupation
or employment for which the employee is suited by reason of the employee's
previous training, education and experience.
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3. Scope and Duration
Awards under the 1993 Plan ('Awards') may be granted in the form of options
to purchase Shares ('Stock Options'), Shares, units to acquire Shares ('Units'),
or stock appreciation rights ('Rights'); provided, however, that no Award shall
be made under the 1993 Plan after April 25, 2003. The maximum aggregate number
of Shares as to which Awards may be granted in any calendar year under the 1993
Plan is 1.5% of the issued Shares which shall, for this purpose, include issued
Shares reacquired by the Company, determined as of December 31 of the
immediately preceding year, plus any Shares remaining from the prior year;
provided, however, that for each year the 1993 Plan is in effect, no more than
1,700,000 Shares shall be available for the grant of Incentive Stock Options.
Awards in the form of Shares and Units in any calendar year may not exceed 10%
of the maximum Awards which may be granted in that year and all prior years,
less all such Awards granted in prior years. In addition, no employee may
receive grants of Stock Options, Rights or any combination thereof under the
1993 Plan with respect to more than 1,500,000 Shares over any three-year period.
Shares utilized for Awards may be in whole or in part, as the Board of Directors
shall determine, authorized but unissued Shares or issued Shares reacquired by
the Company. Any Shares issued by the Company upon the assumption of or in
substitution for outstanding awards made by a corporation or other business
entity acquired by the Company shall not reduce the number of Shares available
for Awards under the 1993 Plan (unless such Awards are made to individuals who
become Section 16 Employees upon the acquisition).
4. Administration
The Committee shall have discretionary authority to administer the 1993
Plan including, without limitation, the power to grant Stock Options, to
determine the purchase price of the Shares covered by each Stock Option, the
term of each Stock Option, to designate Stock Options as 'Incentive Stock
Options' as described in the Internal Revenue Code of 1986, as amended (the
'Code'), or non-qualified Stock Options; to grant Rights, Shares and Units and
to determine the term of the restricted period or other conditions applicable to
such Awards; to determine the employees to whom, and the time or times at which,
Awards shall be granted and the number of Stock Options, Shares, Rights or Units
to be covered by each such Award; to interpret the provisions of the 1993 Plan;
to prescribe, amend and rescind rules and regulations relating to the 1993 Plan;
and to make all other determinations and take any action it shall deem necessary
or advisable for the administration of the 1993 Plan. The Committee may delegate
to one or more of its members or to one or more agents who may be employees of
the Company such authority as it may deem advisable, and the Committee or any
person to whom it has delegated authority as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the 1993 Plan.
The Committee may employ attorneys, consultants, accountants or other
persons, and the Committee, the Company and its officers and directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee shall be final and binding upon all employees who have received
Awards, the Company and all other interested persons.
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5. Eligibility; Factors to be Considered in Granting Awards
Awards will be limited to officers and other employees who are regular
full-time employees of the Company or an Affiliate. In determining the employees
to whom Awards shall be granted and the number of Shares or Units to be covered
by each Award, the Committee shall take into account the nature of employees'
duties, their present and potential contributions to the success of the Company
and such other factors as it may deem relevant. A director of the Company or of
an Affiliate who is not also a regular full-time employee will not be eligible
to receive an Award. Awards may be granted singly, in combination or in tandem
and may be made in combination or in tandem with or in replacement of, or as
alternatives to, awards or grants under any other employee plan maintained by
the Company. An Award, other than an Award of Shares, may provide for the
accrual or payment of Dividend Equivalents or notional interest.
6. Option Price
The purchase price of Shares covered by each Stock Option shall be
determined by the Committee, but in no event shall be less than 100% of the Fair
Market Value of a Share on the date the Stock Option is granted. Such price
shall be subject to adjustment as provided in paragraph 17.
7. Term of Options
The term of each Incentive Stock Option granted under the 1993 Plan shall
be not more than ten years from the date of grant, as the Committee shall
determine, and the term of each non-qualified Stock Option granted under the
1993 Plan shall be such period of time as the Committee shall determine. Such
Stock Options are subject to earlier termination as provided in paragraphs 15,
16 and 17.
8. Exercise of Options
(a) A Stock Option granted under the 1993 Plan shall become exercisable at
the earliest of the date set forth in the Stock Option agreement, the employee's
normal retirement date, the employee's death or Total Disability or the
occurrence of an Acceleration Date as defined in paragraph 12. The Committee may
also, in its discretion, accelerate the exercisability of any Stock Option at
any time.
(b) The purchase price of the Shares as to which a Stock Option is
exercised shall be paid in full at the time of exercise; payment may be made in
cash, which may be paid by check or other instrument acceptable to the Company,
in Shares, valued at Fair Market Value, or if permitted by the Committee and
subject to such terms and conditions as it may determine, by surrender of
outstanding Awards under the 1993 Plan.
(c) Any Stock Option issued hereunder which is intended to qualify as an
'Incentive Stock Option' shall be subject to such limitations or requirements as
may be necessary for the purposes of Section 422 of the Code or any regulations
and rulings promulgated thereunder to the extent and in such form as determined
by the Committee in its discretion.
(d) Except as provided in paragraphs 14, 15 and 16, no Stock Option may be
exercised unless the holder thereof is at the time of such exercise a regular
full-time employee of the Company or an Affiliate.
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9. Award and Exercise of Rights
(a) A Right may be awarded by the Committee in connection with any Stock
Option granted under the 1993 Plan, either at the time the Stock Option is
granted or thereafter at any time prior to the exercise, termination or
expiration of the Stock Option ('Tandem Right'), or separately ('Freestanding
Right'). Each Tandem Right shall be subject to the same terms and conditions as
the related Stock Option and shall be exercisable only to the extent the Stock
Option is exercisable.
(b) A Right shall entitle the employee upon exercise in accordance with its
terms to receive, subject to the provisions of the 1993 Plan and such rules and
regulations as from time to time may be established by the Committee, a payment
having an aggregate value equal to (A) the excess of (i) the Fair Market Value
on the exercise date of one Share over (ii) the option price per Share, in the
case of a Tandem Right, or the price per Share specified in the written
agreement evidencing the Right, in the case of a Freestanding Right, times (B)
the number of Shares with respect to which the Right shall have been exercised.
The payment shall be made in the form of all cash, all Shares or a combination
thereof, as determined by the Committee in its sole discretion.
(c) The price per Share specified in a Freestanding Right shall not be less
than 100% of the Fair Market Value of a Share on the date the Right is granted.
(d) If upon exercise of a Right the employee is to receive a portion of the
payment in Shares, the number of Shares received shall be determined by dividing
such portion by the Fair Market Value of a Share on the exercise date.
(e) A Tandem Right may be awarded by the Committee which will become
payable only upon the occurrence of an Acceleration Date (a 'Limited Right').
The holder of a Limited Right shall, upon the occurrence of an Acceleration
Date, receive payment as described in paragraph 12(b); provided, however, that
no payment shall be made to a Section 16 Employee unless a period of six months
shall have elapsed from the date of grant of the Limited Right.
(f) Whether payments to employees upon exercise of Tandem Rights or
Freestanding Rights are made in cash, Shares or a combination thereof, the
Committee shall have sole discretion as to the timing of any cash payment,
whether in one lump sum or in annual installments or otherwise deferred.
10. Award and Delivery of Restricted Shares or Restricted Units
(a) At the time an Award of Shares or Units is made, the Committee shall
establish such restrictions or conditions applicable to such Award as it deems
advisable. The Committee may, in its sole discretion, provide for the
incremental lapse of restrictions (the 'Restricted Period') and for the lapse or
termination of restrictions upon the satisfaction of other conditions in
addition to or other than the expiration of the Restricted Period with respect
to all or any portion of the restricted Shares or restricted Units. The
Committee may also in its sole discretion shorten or terminate the Restricted
Period or waive any conditions for the lapse or termination of restrictions with
respect to all or any portion of the Shares or Units. Notwithstanding the
foregoing, all restrictions shall lapse or terminate and all conditions shall be
waived with respect to all restricted Shares or restricted Units upon death,
Total Disability or the occurrence of an Acceleration Date as defined in
paragraph 12.
(b) A stock certificate representing the number of restricted Shares
granted to an employee shall be registered in the employee's name but shall be
held in custody by the Company for the employee's account. The employee shall
generally have the rights and privileges of a shareowner as to such restricted
Shares, including the right to vote such restricted Shares, except that, subject
to the
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provisions of paragraph 15, the following restrictions shall apply: (i) the
employee shall not be entitled to delivery of the certificate until the
expiration or termination of the Restricted Period and the satisfaction of any
other conditions prescribed by the Committee; (ii) none of the restricted Shares
may be sold, transferred, assigned, pledged, or otherwise encumbered or disposed
of during the Restricted Period and until the satisfaction of any other
conditions prescribed by the Committee; and (iii) all of the restricted Shares
shall be forfeited and all rights of the employee to such restricted Shares
shall terminate without further obligation on the part of the Company unless the
employee has satisfied all conditions prescribed by the Committee applicable to
such restricted Shares. At the discretion of the Committee, cash and stock
dividends with respect to the restricted Shares may be either paid currently or
withheld by the Company for the employee's account, and interest may be paid on
the amount of cash dividends withheld at a rate and subject to such terms as
determined by the Committee. Upon the forfeiture of any restricted Shares, such
forfeited Shares shall be transferred to the Company without further action by
the employee.
(c) Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Committee or at such
earlier time as provided for in paragraph 12, the restrictions applicable to the
restricted Shares shall lapse and a stock certificate for the number of
restricted Shares and cash equal to the Fair Market Value of any fractional
Share with respect to which the restrictions have lapsed shall be delivered,
free of all such restrictions, except any that may be imposed by law, to the
employee or the employee's beneficiary or estate, as the case may be.
(d) In the case of an Award of restricted Units, no Shares shall be issued
at the time the Award is made, and the Company shall not be required to set
aside a fund for the payment of any such Award.
Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Committee or at such
earlier time as provided for in paragraph 12, the Company shall deliver to the
employee or the employee's beneficiary or estate, as the case may be, one Share
for each restricted Unit with respect to which the restrictions have lapsed
('Vested Unit') and cash equal to any Dividend Equivalents credited with respect
to each such Vested Unit and the interest thereon; provided, however, that the
Committee may, in its sole discretion, elect to pay cash or part cash and part
Shares in lieu of delivering only Shares for the Vested Units. If a cash payment
is made in lieu of delivering Shares, the amount of such cash payment shall be
equal to the Fair Market Value of the Shares for the date on which the
Restricted Period lapsed with respect to such Vested Units.
(e) The restricted Unit agreement may permit an employee to request that
the payment of Vested Units (and Dividend Equivalents and the interest thereon
with respect to such Vested Units) be deferred beyond the payment date specified
in the agreement. The Committee shall, in its sole discretion, determine whether
to permit such deferral and specify the terms and conditions, which are not
inconsistent with the 1993 Plan, to be contained in the written agreement
evidencing the Award. In the event of such deferral, the Committee may determine
that interest shall be credited annually on the Dividend Equivalents at a rate
to be determined by the Committee. The Committee may also determine to compound
such interest.
11. Settlement of Awards/Tax Withholding
(a) A Stock Option may be exercised at any time or from time to time, as to
any or all full Shares as to which the Stock Option is then exercisable;
provided, however, that any such exercise shall be
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for at least 100 Shares or, if less, the number of Shares as to which the Stock
Option is then exercisable.
(b) Payment and delivery of Shares in satisfaction of an Award of Units,
Rights or Shares shall be in full Shares, and payment with respect to any
fractional Share interest in an Award shall be in cash, in an amount determined
on the basis of the Fair Market Value of a Share on the date the Award becomes
payable.
(c) No payment will be required of any employee upon the grant of any Award
in the form of a Stock Option or Right or an Award of Units or Shares which are
subject to restrictions or conditions. Upon exercise of a Stock Option or Right
or the expiration or termination of any restrictions or conditions with respect
to a Unit or Share Award, any amount necessary to satisfy applicable federal,
state or local tax requirements shall be withheld (subject to such limitations
or conditions as the Committee may establish in its sole discretion) or paid
promptly on notification of the amount due. The Committee may permit such amount
to be paid in Shares previously owned by the employee, or by withholding a
portion of the Shares that otherwise would be distributed upon exercise of the
Stock Option or Right or expiration or termination of restrictions or conditions
with respect to a Unit or Share Award, or a combination of cash and Shares.
12. Acceleration
(a) A Stock Option shall become immediately exercisable as to all Shares
remaining subject to the Stock Option and all restrictions shall lapse or
terminate and all conditions shall be waived with respect to all restricted
Shares or restricted Units on or following either (i) the purchase of Shares
pursuant to a tender offer or exchange offer (other than an offer by the
Company) for all, or any part of, the outstanding Shares ('Offer') in which at
least a majority of the outstanding Shares subject to the Offer is tendered or
exchanged by the Company's shareowners, other than Section 16 Employees, and not
withdrawn, (ii) a Change in Control, (iii) a merger in which the Company will
not survive as an independent publicly owned corporation, a consolidation, or a
sale, exchange or other disposition of all or substantially all of the Company's
assets which, in each instance, is approved by the Company's shareowners
eligible to vote on the transaction, other than Section 16 Employees, whether or
not the transaction is conditioned on such approval, or (iv) a substantial
change in the composition of the Board of Directors during any period of two
consecutive years such that individuals who at the beginning of such period were
members of the Board of Directors cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by the
Company's shareowners, of each new director was approved by a vote of at least
two-thirds of the directors, other than those directors who are Section 16
Employees, then still in office who were directors at the beginning of the
period (the date upon which an event described in clause (i), (ii), (iii) or
(iv) of this paragraph 12(a) occurs shall be referred to herein as an
'Acceleration Date').
(b) In no event later than 90 days after an Acceleration Date, the holder
of Limited Rights shall receive in cash whichever of the following amounts is
applicable: (i) in the case of the occurrence of an Offer, an amount equal to
the Offer Spread; (ii) in the case of a Change in Control, an amount equal to
the Acquisition Spread; (iii) in the case of an event described in paragraph
12(a)(iii) above, an amount equal to the Merger Spread; and (iv) in the case of
a change in the composition of the Board of Directors as described in paragraph
12(a)(iv) above, an amount equal to the Spread. Notwithstanding the foregoing,
in the case of Limited Rights granted in respect of an Incentive Stock
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Option, the holder may not receive an amount in excess of such amount as will
enable such option to qualify as an Incentive Stock Option.
(c) Upon the occurrence of an Acceleration Date, all outstanding Vested
Units (including restricted Units whose restrictions have lapsed as a result of
the occurrence of such Acceleration Date and Vested Units where payment was
previously deferred) shall be converted into cash as soon as practicable but in
no event later than 90 days after such Acceleration Date in an amount equal to
the total number of Vested Units credited to an employee's account multiplied by
the Multiplication Factor (as defined below). All Vested Units and credited
Dividend Equivalents (other than Vested Units and credited Dividend Equivalents
where payment was previously deferred and an election for a lump sum payment was
not made in accordance with the procedure described below) shall be payable in
cash as soon as practicable but in no event later than 90 days after such
Acceleration Date. 'Multiplication Factor' shall mean (i) in the event of the
occurrence of an Offer, the Offer Price per Share, (ii) in the case of a Change
in Control, the Acquisition Price per Share, (iii) in the case of an event
described in paragraph 12(a)(iii) above, the Merger Price per Share, or (iv) in
the case of a change in the composition of the Board of Directors as described
in paragraph 12(a)(iv) above, the highest Fair Market Value per Share for any
day during the applicable ninety-day period. For purposes of the preceding
sentence, the applicable ninety-day period shall mean (i) the ninety-day period
ending on or within 89 days following the Acceleration Date which the Committee,
in its sole discretion, shall select prior to the Acceleration Date or (ii) if
the Committee shall not have selected a ninety-day period prior to the
Acceleration Date, the ninety-day period ending on the forty-fifth day following
the Acceleration Date.
(d) Notwithstanding anything to the contrary in the 1993 Plan, after an
Acceleration Date the rate at which interest shall be credited on deferred
Dividend Equivalents may not be reduced by the Committee below the rate last set
by the Committee prior to the Acceleration Date (the 'Prior Rate'), the 1993
Plan may not be amended to reduce the Prior Rate and interest shall be credited
annually at the Prior Rate or such higher rate as the Committee may determine
following the Acceleration Date on all cash amounts which were previously
deferred, including the cash amounts into which Vested Units are converted
pursuant to paragraph 12(c), the Dividend Equivalents with respect to Vested
Units and the interest on all such deferred cash amounts.
(e) Notwithstanding anything to the contrary in the 1993 Plan, an employee
may, with respect to a deferred payment of Vested Units, Dividend Equivalents
and the interest thereon with respect to such Vested Units (the 'Deferred
Payment'), elect to have the Deferred Payment paid in one lump-sum as soon as
practicable following an Acceleration Date, but in no event later than 90 days
after such Acceleration Date. The election must be made not later than when the
employee requests that the payment of Vested Units (and Dividend Equivalents and
the interest thereon with respect to such Vested Units) be deferred beyond the
date specified in the respective restricted Unit agreement, but in no event
after an Acceleration Date.
(f) Upon the occurrence of an Acceleration Date, a Right shall be
exercisable; provided, however, that a Tandem Right shall be exercisable only to
the extent the related Stock Option is exercisable.
13. Beneficiaries
In the case of an Award that is not forfeited upon the death of the
employee, the employee may designate a beneficiary with respect to such Award in
the event of the employee's death. If such beneficiary is the executor or
administrator of the estate of the employee or if the employee dies
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without naming a beneficiary, any rights with respect to such Award may be
transferred to the person or persons or entity (including a trust) entitled
thereto by bequest of or inheritance from the holder of such Award.
14. Transferability of Awards
The Committee shall have the discretionary authority to grant Stock Options
which would be transferable to members of an employee's immediate family,
including trusts for the benefit of such family members and partnerships in
which such family members are the only partners. For purposes of paragraphs 15
and 16, a transferred option may be exercised by the transferee to the extent
that the employee would have been entitled had the option not been transferred.
Except as otherwise determined by the Committee or as provided in paragraph
13, Awards may not be assigned, pledged or transferred. Stock Options and Rights
may be exercised during the lifetime of the employee only by the employee or by
the employee's guardian or legal representative, unless otherwise determined by
the Committee.
15. Termination of Employment
(a) If an employee terminates employment with an outstanding Stock Option
or Right under the 1993 Plan, such Stock Option or Right shall expire on the
earlier of the date described in the individual Stock Option or Right agreement
or the following dates:
1. If an employee voluntarily terminates for reasons other than
Retirement (as defined below), Total Disability or death, the Stock Option
or Right may be exercised (or in the case of a Limited Right, automatically
converted into cash upon the occurrence of an Acceleration Date) to the
extent that the employee was entitled to do so at the termination of
employment for a period of three months following termination of
employment, but in no case later than the date on which the Stock Option or
Right terminates.
2. If an employee is terminated for cause, the Stock Option or Right
shall immediately terminate.
3. If an employee is involuntarily terminated other than for cause,
the Stock Option or Right may be exercised (or in the case of a Limited
Right, automatically converted into cash upon the occurrence of an
Acceleration Date) to the extent that the employee was entitled to do so at
the termination of employment for a period of three years following
termination of employment, but in no case later than the date on which the
Stock Option or Right terminates.
(b) In the event that the employment of an employee to whom a Stock Option
or Right has been granted under the 1993 Plan is terminated by reason of
retirement from active employment at or after the earliest permissible
retirement date specified in the qualified retirement plan of the Company or an
Affiliate covering such employee ('Retirement'), such Stock Option or Right may
be exercised (or in the case of a Limited Right, automatically converted into
cash upon the occurrence of an Acceleration Date) to the extent that the
employee was entitled to do so at the termination of employment at any time
within ten years after such termination, but in no case later than the date on
which the Stock Option or Right terminates.
(c) Unless otherwise determined by the Committee, if an employee to whom
restricted Shares or restricted Units have been granted ceases to be an employee
of the Company or an Affiliate for any
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reason other than death or Total Disability prior to the end of the Restricted
Period and the satisfaction of any other conditions prescribed by the Committee,
the employee shall immediately forfeit all such Shares and Units.
(d) Awards granted under the 1993 Plan shall not be affected by any change
of duties or position so long as the holder (or, in the case of transferred
Stock Options, the transferor) continues to be a regular full-time employee of
the Company or an Affiliate. Any Stock Option, Right, Share or Unit agreement,
or any rules and regulations relating to the 1993 Plan, may contain such
provisions as the Committee shall approve with reference to the determination of
the date employment terminates and the effect of leaves of absence. Nothing in
the 1993 Plan or in any Award granted pursuant to the 1993 Plan shall confer
upon any employee any right to continue in the employ of the Company or an
Affiliate or limit in any way the right of the Company or an Affiliate to
terminate such employment at any time.
16. Death or Total Disability of Employee
If an employee to whom a Stock Option or Right has been granted under the
1993 Plan dies or suffers a Total Disability, such Stock Option or Right may be
exercised by the employee, the legal guardian of the employee, a legatee or
legatees of the employee under the employee's last will, the employee's
designated beneficiary or beneficiaries (in the event of the employee's death),
the employee's personal representatives or distributees, or the transferee of a
transferred Stock Option, whichever is applicable, to the extent that the
employee was entitled to do so at the termination of employment (including by
reason of death or Total Disability) and subject to any restrictions which may
be applicable to persons who are Section 16 Employees. In the case of death or
Total Disability of an employee while employed, such Stock Option or Right may
be exercised (or in the case of a Limited Right, automatically converted into
cash upon the occurrence of an Acceleration Date) at any time within ten years
after the employee's death or Total Disability, but in no case later than the
date on which the Stock Option or Right terminates. In the case of death or
Total Disability after termination of employment, such Stock Option or Right may
be exercised (or in the case of a Limited Right, automatically converted into
cash upon the occurrence of an Acceleration Date) at any time prior to the date
on which the Stock Option or Right terminates without regard to this paragraph
or, if later, one year after the employee's death or Total Disability.
17. Adjustment Upon Changes In Capitalization
Notwithstanding any other provision of the 1993 Plan, the Committee may at
any time make or provide for such adjustments to the 1993 Plan, to any
outstanding Awards and to the number and class of Shares as to which Awards may
be granted to any employee over any three-year period, to all employees through
April 25, 2003 and as Incentive Stock Options in any year, and may make such
adjustments to any outstanding Awards, as it shall deem appropriate to prevent
dilution or enlargement of rights, including adjustments in the event of
distributions to holders of Common Stock (other than normal cash dividends),
changes in the outstanding Common Stock by reason of stock dividends, stock
splits, recapitalizations, mergers, consolidations, combinations or exchanges of
Shares, separations, reorganizations, liquidations and the like. In the event of
any offer to holders of Common Stock generally relating to the acquisition of
their Shares, the Committee may make such adjustment as it deems equitable in
respect of outstanding Awards including in the Committee's discretion revision
of outstanding Stock Options, Rights and Units so that they may be exercisable
for
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or payable in the consideration payable in the acquisition transaction. Any such
determination by the Committee shall be conclusive.
18. Effective Date
The 1993 Plan as amended shall become effective as of January 1, 1994 upon
approval by the Company's shareowners at the Company's 1994 Annual Meeting of
Shareowners. The Committee may, in its discretion, grant Awards under the 1993
Plan, the grant, exercise or payment of which shall be expressly subject to the
conditions that to the extent required at the time of grant, exercise or payment
(i) the Shares covered by such Awards shall be duly listed, upon official notice
of issuance, upon the New York Stock Exchange, and (ii) if the Company deems it
necessary or desirable a Registration Statement under the Securities Act of 1933
with respect to such Shares shall be effective.
19. Termination and Amendment
The Board of Directors of the Company may suspend, terminate, modify or
amend the 1993 Plan, provided that any amendment that would materially increase
the aggregate number of Shares which may be issued under the 1993 Plan;
materially increase the benefits accruing to participants under the 1993 Plan;
or materially modify the requirements as to eligibility for participation in the
1993 Plan, shall be subject to the approval of the Company's shareowners, except
that any such increase or modification that may result from adjustments
authorized by paragraph 17 does not require such approval. If the 1993 Plan is
terminated, the terms of the 1993 Plan shall, notwithstanding such termination,
continue to apply to Awards granted prior to such termination. In addition, no
suspension, termination, modification or amendment of the 1993 Plan may, without
the consent of the employee to whom an Award shall theretofore have been
granted, adversely affect the rights of such employee under the Award.
20. Written Agreements
Each Award of Stock Options, Rights, Shares or Units shall be evidenced by
a written agreement, to the extent deemed necessary or advisable by the
Committee, executed by the employee and the Company, which shall contain such
restrictions, terms and conditions as the Committee may require.
21. Awards in Foreign Countries
The Committee shall have the authority to adopt such modifications,
procedures and subplans as may be necessary or desirable to comply with
provisions of the laws of foreign countries in which the Company or an Affiliate
may operate to assure the viability of the benefits of Awards made to
individuals employed in such countries and to meet the objectives of the 1993
Plan.
22. Benefit Plans and Other Stock Plans
Awards under the 1993 Plan are discretionary, are not part of regular
salary and may not be used in determining the amount of compensation for any
purpose under the benefit plans of the Company or its Affiliates, except as the
Committee may otherwise expressly provide.
The adoption of the 1993 Plan shall have no effect on awards made or to be
made pursuant to other stock plans covering employees of the Company, an
Affiliate, or any predecessors or successors thereto.
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EXHIBIT B
ALLIEDSIGNAL INC.
INCENTIVE COMPENSATION PLAN
FOR EXECUTIVE EMPLOYEES
(As amended effective as of January 1, 1994)
I. Purpose
The purpose of the AlliedSignal Inc. Incentive Compensation Plan for
Executive Employees (the 'Plan') is to attract and retain highly qualified
employees, to obtain from each the best possible performance, to establish a
performance goal based on Consolidated Earnings for Incentive Compensation
Awards for Senior Executive Employees and to underscore the importance to
employees of achieving particular business objectives established for
AlliedSignal Inc. and its operating units for both the short and long term.
II. Definitions
For the purposes of the Plan, the following terms shall have the following
meanings:
A. Awards. Incentive Compensation Awards or Long-Term Awards made
pursuant to the Plan.
B. Board of Directors. The Board of Directors of AlliedSignal Inc.
C. Committee. The Management Development and Compensation Committee of
the Board of Directors or any successor thereto.
D. Consolidated Earnings. Consolidated net income for the year for
which an Award is made as shown on the audited consolidated statement of
income of the Company, adjusted to omit the effects of extraordinary items,
gain or loss on the disposal of a business segment (other than provisions
for operating losses or income during the phase-out period), unusual or
infrequently occurring events and transactions and the cumulative effects
of changes in accounting principles, all as determined in accordance with
generally accepted accounting principles.
E. Company. AlliedSignal Inc. or AlliedSignal Inc. and its
subsidiaries, as the context requires.
F. Covered Employee. An Employee who is a 'covered employee' within
the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended, as such section may be amended.
G. Employee. An individual who is on the active salaried payroll of
the Company or a subsidiary of the Company at any time during the period
for which an Award is made.
H. Executive Employee. An Employee who by reason of job
responsibilities is in a position to make a measurable contribution to the
achievement of the Company's objectives as established from time to time in
connection with the Plan. For purposes of the Plan, the term Executive
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Employee does not include an Employee covered by the definition of the term
Senior Executive Employee.
I. Reserve. The Incentive Compensation Reserve established pursuant to
Section IV of the Plan.
J. Senior Executive Employee. An officer of AlliedSignal Inc. or other
senior-level Employee who by reason of job responsibilities has been
determined by the Committee to be in a position to make a significant
contribution to the achievement of the Company's objectives as established
from time to time in connection with the Plan.
III. Effective Date
The Plan has been amended and restated effective as of January 1, 1994 and
shall become effective upon approval by the Company's shareowners at the
Company's 1994 Annual Meeting of Shareowners.
IV. Amounts Available for Awards
A. The maximum amount available for Incentive Compensation Awards to Senior
Executive Employees shall be determined as set forth in paragraph B of this
Section IV and such Awards shall be chargeable against the Reserve. The maximum
amount available for Long-Term Awards to Senior Executive Employees and for both
Incentive Compensation and Long-Term Awards to Executive Employees shall be
determined by the Committee and such Awards shall not be chargeable against the
Reserve.
B. A Reserve shall be established to which will be credited for each fiscal
year an amount to be determined by the Board of Directors not in excess of 2% of
Consolidated Earnings for such year.
Before the Board of Directors shall determine the amount to be credited to
the Reserve for any fiscal year, the Company's independent accountants for such
year shall report to the Board of Directors the maximum amount, if any, which
may be credited to the Reserve for such year. After receipt of the accountants'
report, which may be based on an estimate of the Company's financial results for
the year, the Board of Directors shall determine the amount (not greater than
such maximum amount) that shall be credited to the Reserve for such year. If the
accountants' report is based on an estimate, the amount credited to the Reserve
shall be subject to receipt of a further report from the accountants to the
Board of Directors confirming the maximum amount which may be credited to the
Reserve.
The total amount of Incentive Compensation Awards to Senior Executive
Employees for a fiscal year shall be limited by the total then in the Reserve
but need not exhaust such total. Any balance remaining after the making of
Awards to Senior Executive Employees shall be removed from the Reserve and will
not be available for future Awards to Senior Executive Employees.
V. Eligibility for Awards
Incentive Compensation and Long-Term Awards to Senior Executive Employees
for any period may be granted to those Senior Executive Employees who shall be
selected by the Committee. Such selections, except in the case of the Company's
Chief Executive Officer, shall be made after considering the recommendations of
the Chief Executive Officer. The Committee shall also give
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consideration to the contribution made by the Employee to achievement of the
Company's established objectives and such other matters as it shall deem
relevant. Incentive Compensation and Long-Term Awards to Executive Employees for
any period may be granted to those Executive Employees who shall be selected by
the Chief Executive Officer.
In the discretion of the Committee or the Chief Executive Officer, as
appropriate, Awards may be made to Employees who retired or whose employment
terminated after the beginning of the period for which an Award is made, or to
the designee or estate of an Employee who died during such period.
VI. Determination of Amounts of Awards
The amounts of Awards to Senior Executive Employees will be determined by
the Committee acting in its discretion. Such determinations, except in the case
of the Award for the Chief Executive Officer, shall be made after considering
the recommendations of the Chief Executive Officer and such other matters as the
Committee shall deem relevant. The amounts of Awards to Executive Employees will
be determined by the Chief Executive Officer.
Two types of awards may be made under the Plan:
(a) Incentive Compensation Awards. These are Awards based on
achievement of short-term business objectives for the Company as
established by the Board of Directors or the Committee for this purpose for
each year, and achievement of short-term business objectives for the
Company's operating units as established by the Chief Executive Officer for
this purpose for each year. Awards to Executive Employees may be based on
achievement of short-term business objectives for the Company's operating
units rather than for the Company.
In establishing short-term business objectives, consideration will be
given to, among other things, the financial plans for the year for the
Company and its operating units.
The maximum Incentive Compensation Award payable with respect to any
fiscal year to an individual who is the Chief Executive Officer during any
part of such fiscal year shall be equal to 0.4% of Consolidated Earnings
for such year. The maximum Incentive Compensation Award payable with
respect to any fiscal year to any other Employee shall be equal to 0.2% of
Consolidated Earnings for such year. If the total of the maximum Incentive
Compensation Awards determined pursuant to this paragraph VI for Senior
Executive Employees would otherwise exceed 2% of Consolidated Earnings for
a fiscal year, then each individual maximum shall be reduced pro-rata so
that in the aggregate their total equals 2% of Consolidated Earnings.
(b) Long-Term Awards. These are Awards based on achievement of
long-term objectives established by the Board of Directors or the Committee
for this purpose for each long-term performance period.
Long-term performance periods will cover a period longer than one
fiscal year. Long-term objectives will be established in terms of some
measurable standard determined by the Board of Directors or the Committee
for each period.
The Employee's individual performance and contribution to the achievement
of established objectives will be considered in determining the amount of an
Award.
Awards may be made either at or following the end of the fiscal year or
long-term performance periods to which they relate; provided, however, that no
Incentive Compensation Awards shall be made to Senior Executive Employees prior
to receipt by the Chief Executive Officer of assurances
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from the Chief Financial Officer and the Company's independent accountants that
the amount which the Board of Directors has determined shall be credited to the
Reserve for the fiscal year to which the Awards relate is not greater than the
maximum amount permitted under Section IV.
VII. Form of Awards
Awards under the Plan shall be made in cash.
VIII. Payment of Awards
A. Awards under the Plan shall be paid currently, unless the Committee
shall determine that any Award shall be deferred. Deferred Awards may be made in
one lump sum or in installments and may accrue notional interest, all as the
Committee shall determine; provided, however, that the rate of notional interest
shall not exceed the greater of (i) 10% or (ii) 200% of the 10-year U.S.
Treasury Bond rate at the time of determination, and interest shall be
compounded daily. An individual to whom an Award has been made shall not have
any interest in the cash until the cash has been paid.
B. When an Award is made, the Company shall cause the cash to be paid to
the individual to whom the Award is made at the time or times specified by the
Committee or the Chief Executive Officer, as appropriate, or, if no time or
times is specified, as soon as practicable after the Award is made.
C. When circumstances are deemed justifiable by the Committee, it may, upon
agreement with the Employee or the Employee's estate or designee, authorize an
immediate lump sum payment in cancellation of all or any part of any outstanding
deferred Award, authorize a change in the number of installments in which a
deferred Award is to be paid or authorize a change in the time of payment of any
unpaid installments. Any such lump sum payments shall be equal to the amount of
the unpaid installments canceled plus any accrued notional interest.
D. At the time any Incentive Compensation Award is made to Senior Executive
Employees, the Reserve shall be reduced by the amount of such Award, regardless
of whether such Award is in a lump sum or in installments, current or deferred.
IX. Accelerated Payment
Notwithstanding anything to the contrary in the Plan, in the event of (i)
the purchase of shares of the Common Stock of AlliedSignal Inc. ('Common Stock')
pursuant to a tender offer or exchange offer (other than an offer by the
Company) for all or any part of the Common Stock, (ii) a change in control of
the Company (as defined in this Section IX), (iii) a merger (other than a merger
into a majority owned subsidiary of the Company) in which the Company will not
survive as an independent, publicly owned corporation, a consolidation, or a
sale, exchange or other disposition of all or substantially all the Company's
assets, or (iv) a substantial change in the composition of the Board of
Directors during any period of two consecutive years such that individuals who
at the beginning of such period were members of the Board of Directors cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for election by the Company's shareowners of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period (the date upon which an
event described in clause (i), (ii), (iii) or (iv) of this Section IX occurs
shall be referred to herein as an 'acceleration date'), the Employee shall be
entitled to receive, and the Company shall pay in cash to the Employee on or as
soon as
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practicable following such acceleration date, but in no event later than 90 days
after the acceleration date, (a) the Employee's Incentive Compensation and
Long-Term Awards (other than previously deferred Awards) for each year and
long-term performance period that has been completed prior to the acceleration
date but which have not yet been paid, (b) an amount equal to the maximum
Incentive Compensation Award for any year that has not been completed to which
the Employee would have been entitled if the short-term business objectives for
such year had been met and if the Employee had been employed throughout the
entire year times a fraction the numerator of which is the number of full months
of employment during such year to the acceleration date and the denominator of
which is 12, and (c) an amount equal to the maximum Long-Term Award for each
long-term performance period that has not been completed to which the Employee
would have been entitled if the long-term objectives for such period had been
met and if the Employee had been employed throughout each such period times a
fraction the numerator of which is the number of full months of employment
during such long-term performance period to the acceleration date and the
denominator of which is the total number of full months in such long-term
performance period.
A 'change in control' is deemed to occur at the time when any entity,
person or group (other than the Company, any subsidiary or any savings, pension
or other benefit plan for the benefit of employees of the Company or its
subsidiaries) which theretofore beneficially owned less than 30% of the Common
Stock then outstanding acquires shares of Common Stock in a transaction or
series of transactions that results in such entity, person or group directly or
indirectly owning beneficially 30% or more of the outstanding Common Stock.
An Employee may elect, with respect to deferred Awards and notional
interest accrued thereon, if any ('Deferred Awards'), that the Deferred Awards
be paid in one lump-sum payment as soon as practicable following an acceleration
date, but in no event later than 90 days after such acceleration date. Such
election must be filed at the time the Employee requests the Committee to defer
an Award, but in no event after an acceleration date.
Notwithstanding anything to the contrary in the Plan, after an acceleration
date the rate at which notional interest shall be credited on Deferred Awards
may not be reduced by the Committee below the rate last set by the Committee
prior to the acceleration date (the 'Prior Rate'), the Plan may not be amended
to reduce the Prior Rate and notional interest shall be credited annually at the
Prior Rate or such higher rate as the Committee may determine following the
acceleration date on all amounts which continue to be deferred following the
acceleration date, including notional interest on all such deferred amounts.
X. Special Awards and Other Plans
Nothing contained in the Plan shall prohibit the Company or any of its
subsidiaries from granting special performance or recognition awards, not
chargeable against the Reserve, under such conditions, and in such form and
manner as it sees fit, to Employees (including Senior Executive Employees) for
meritorious service of any nature.
In addition, nothing contained in the Plan shall prohibit the Company or
any of its subsidiaries from establishing other incentive compensation plans
providing for the payment of incentive compensation to Employees (including
Senior Executive Employees), not chargeable against the Reserve.
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XI. Amendment and Interpretation of the Plan
A. The Board of Directors shall have the right with the prior approval of
the Committee to amend the Plan from time to time or to repeal it entirely or to
direct the discontinuance of Awards either temporarily or permanently; provided,
however, that (i) no amendment of the Plan shall operate to annul, without the
consent of the Employee, an Award already made hereunder, and (ii) with respect
to Incentive Compensation Awards for Covered Employees, no amendment of the Plan
to change the performance goal based on Consolidated Earnings, to change the
maximum Incentive Compensation Award, to change the maximum interest rate on
deferred Awards, or to change the definition of Consolidated Earnings, shall be
effective without approval by the shareowners of the Company.
B. The decision of the Committee with respect to any questions arising in
connection with the administration or interpretation of the Plan shall be final,
conclusive and binding.
XII. Miscellaneous
A. All expenses and costs in connection with the operation of the Plan
shall be borne by the Company and no part thereof (other than the amounts of
Incentive Compensation Awards to Senior Executive Employees under the Plan)
shall be charged against the Reserve.
B. All Awards under the Plan are subject to withholding, where applicable,
for federal, state and local taxes.
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EXHIBIT C
STOCK PLAN FOR
NON-EMPLOYEE DIRECTORS OF
ALLIEDSIGNAL INC.
(As amended effective as of April 25, 1994)
1. Purpose
The purpose of the Stock Plan for Non-Employee Directors of AlliedSignal
Inc. (the 'Plan') is to provide certain compensation to eligible directors of
AlliedSignal Inc. (the 'Company') and to encourage the highest level of director
performance by providing such directors with a proprietary interest in the
Company's success and progress by granting them shares of the Company's Common
Stock ('Common Stock') which are restricted in accordance with the terms and
conditions set forth below ('Restricted Shares') and by granting them options to
purchase shares of Common Stock ('Options').
2. Administration
The Plan shall be administered by the Management Development and
Compensation Committee or any successor thereto (the 'Committee') of the
Company's Board of Directors (the 'Board'). Questions involving eligibility for
grants of Restricted Shares and Options, entitlement to Restricted Shares and
Options or the operation of the Plan shall be referred to the Committee. All
determinations of the Committee shall be conclusive. The Committee may obtain
such advice or assistance as it deems appropriate from persons not serving on
the Committee.
3. Eligibility and Grants
To be eligible to participate in the Plan, a director must not be an
officer or employee of the Company or any of its subsidiaries or affiliates.
Each eligible director who has not previously received a grant under the Plan
shall be granted 1,500 Restricted Shares, effective as of the date of such
eligible director's election to the Board. In no event shall any eligible
director be granted more than a total of 3,000 Restricted Shares (for directors
receiving grants prior to April 25, 1994) or 1,500 Restricted Shares (for
directors receiving grants on or after April 25, 1994) under the Plan. In
addition, each year on the date of an Annual Meeting of Shareowners, each
eligible director continuing in office after the Annual Meeting shall be granted
an Option to purchase 1,000 shares of Common Stock. Each eligible director to
whom Restricted Shares or Options are granted is hereinafter referred to as the
'Participant.' If required by the Committee, each grant of Restricted Shares or
Options shall be evidenced by a written agreement duly executed and delivered by
or on behalf of the Company and the Participant.
4. Shares Available
Subject to adjustment as provided in Section 11, the maximum aggregate
number of shares of Common Stock which shall be available for the grant of
Restricted Shares and for issuance upon the exercise of Options is 225,000
shares.
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5. Award and Delivery of Restricted Shares
(a) General. Subject to the provisions of Section 9, the restrictions set
forth in Section 5(b) shall apply to each grant of Restricted Shares for a
period (the 'Restricted Period') from the date of grant until the last to occur
of the following: (i) the expiration of the six-month period immediately
following the date of grant; (ii) the Participant's 65th birthday; and (iii) the
date on which the Participant's service as a director of the Company terminates
with the consent of a majority of the members of the Board other than the
Participant.
(b) Restrictions. A stock certificate representing the number of Restricted
Shares granted shall be registered in the Participant's name but shall be held
in custody by the Company for the Participant's account. The Participant shall
have all rights and privileges of a shareowner as to such Restricted Shares,
including the right to receive dividends and the right to vote such Restricted
Shares, except that, subject to the provisions of Section 9, the following
restrictions shall apply: (i) the Participant shall not be entitled to delivery
of the certificate until the expiration of the Restricted Period; (ii) none of
the Restricted Shares may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted Period; and (iii) all of the
Restricted Shares shall be forfeited and all rights of the Participant to such
Restricted Shares shall terminate without further obligation on the part of the
Company unless the Participant has remained a non-employee director of the
Company for the entire Restricted Period applicable to such Restricted Shares.
If the Participant has remained a non-employee director of the Company for the
entire Restricted Period, such restrictions shall, at the end of the Restricted
Period, lapse with respect to one-fifth of the Restricted Shares for each full
year of the Participant's service then completed (including service prior to the
date of grant) as a non-employee director of the Company (including any
corporation acquired by the Company if the Participant was a non-employee
director of the acquired corporation at the time of acquisition), provided,
however, that a Participant who has received a certificate for Common Stock upon
the lapse of restrictions with respect to any earlier grant under the Plan shall
not receive credit for such prior service in determining years of service for
purposes of any subsequent grant under the Plan. The Participant shall forfeit
all Restricted Shares with respect to which such restrictions do not lapse at
the end of the Restricted Period. Upon the forfeiture (in whole or in part) of
Restricted Shares, such forfeited shares shall be transferred to the Company
without further action by the Participant. The Participant shall have the same
rights and privileges, and be subject to the same restrictions, with respect to
any shares received pursuant to Section 11.
(c) Delivery of Restricted Shares. At the end of the Restricted Period or
at such earlier time as provided for in Section 9, the restrictions applicable
to the Restricted Shares shall lapse as provided in Section 5(b) or Section 9
and a stock certificate for the number of Restricted Shares with respect to
which the restrictions have lapsed shall be delivered, free of all such
restrictions, to the Participant or the Participant's beneficiary or estate, as
the case may be. The Company shall not be required to deliver any fractional
share of Common Stock but will pay, in lieu thereof, the fair market value
(measured as of the date the restrictions lapse) of such fractional share to the
Participant or the Participant's beneficiary or estate, as the case may be.
6. Term of Options.
Each Option granted under the Plan shall have a term of ten years from the
date of grant, subject to earlier termination as provided in Section 9.
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7. Option Price.
Options are priced at 100% of the fair market value of the Common Stock on
the date of grant. Such price shall be subject to adjustment as provided in
Section 11. The fair market value of a share of Common Stock shall be the mean
between the highest and lowest sales prices of the Common Stock as reported on
the New York Stock Exchange Composite Tape for the grant date, or in the absence
of reported sales on that date, on the next preceding day on which there were
reported sales ('Fair Market Value').
8. Exercise of Options.
(a) Each Option shall become 100% exercisable at the earliest of the
Participant's retirement from the Board at or after age 70, death or disability
or on April 1 of the third year after the date of grant. Prior to becoming 100%
exercisable, each option becomes exercisable in cumulative installments of 40%
of the shares of Common Stock subject to the Option on April 1 of the year
following the date of the grant and an additional 30% of the shares on April 1
of each of the next two years.
(b) An Option may be exercised at any time or from time to time, as to any
or all full shares of Common Stock as to which the Option is then exercisable;
provided, however, that any such exercise shall be for at least 100 shares of
Common Stock or, if less, the number of shares of Common Stock as to which the
Option is then exercisable.
(c) The purchase price of the Common Stock as to which an Option is
exercised shall be paid in full at the time of exercise; payment may be made in
cash, which may be paid by check or other instrument acceptable to the Company,
or in shares of Common Stock valued at Fair Market Value.
9. Termination of Directorship.
(a) Disability or Death. If a Participant ceases to be a non-employee
director of the Company prior to the end of the Restricted Period by reason of
disability (as defined below), the Restricted Shares granted to such Participant
shall immediately vest and all restrictions applicable to such shares shall
lapse. If a Participant ceases to be a non-employee director of the Company
prior to the end of the Restricted Period by reason of death, the Restricted
Shares granted to such Participant shall immediately vest in the Participant's
beneficiary or estate and all restrictions applicable to such shares shall
lapse. In either case, a certificate for such shares shall be delivered to the
Participant or the Participant's beneficiary or estate in accordance with
Section 5(c). In addition, if a Participant suffers a disability or dies,
Options may be exercised by the Participant, a legatee or legatees of the
Participant under the Participant's last will, the Participant's designated
beneficiary or beneficiaries (in the event of the Participant's death), or the
Participant's personal representatives or distributees, whichever is applicable,
to the extent that the Participant was entitled to do so at the termination of
the Participant's directorship (including by reason of disability or death). In
the case of disability or death of a non-employee director while serving as a
director of the Company, the Participant's Options may be exercised at any time
prior to the date on which the Option terminates. In the case of disability or
death after termination of the Participant's directorship, such Options may be
exercised at any time prior to the date on which the Option terminates without
regard to this Section 9(a) or, if later, one year after the Participant's
disability or death. For purposes of this Section 9, 'disability' shall mean a
medically determinable physical or mental impairment which renders a Participant
substantially unable to function as a director of the Company.
C-3
<PAGE>
(b) Retirement. If a Participant ceases to be a non-employee director of
the Company by reason of retirement from the Board at or after age 70, the
Participant's Options may be exercised at any time during the remainder of the
Option term.
(c) All Other Terminations. If a Participant ceases to be a non-employee
director of the Company prior to the end of the Restricted Period for any reason
other than death or disability, the Participant shall immediately forfeit all
Restricted Shares. With respect to Options, if a Participant ceases to be a
non-employee director of the Company for any reason other than disability, death
or retirement, the Participant's Options may be exercised, to the extent that
the Participant was entitled to do so at the termination of the Participant's
directorship, for a period of three months after such termination, but in no
case later than the date on which the Option terminates.
10. Regulatory Compliance and Listing
The issuance or delivery of any Restricted Shares or shares of Common Stock
upon the exercise of Options may be postponed by the Company for such period as
may be required to comply with any applicable requirements under the Federal
securities laws, any applicable listing requirements of any national securities
exchange and requirements under any other law or regulation applicable to the
issuance or delivery of such shares, and the Company shall not be obligated to
issue or deliver any Restricted Shares or shares of Common Stock if the issuance
or delivery of such shares shall constitute a violation of any provision of any
law or of any regulation of any governmental authority or any national
securities exchange.
11. Adjustment in Event of Changes in Capitalization
In the event of a recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation, rights offering,
separation, reorganization or liquidation, or any other change in the corporate
structure or shares of the Company, the number of shares of Common Stock that
may be awarded under the Plan and the number and class of shares that may be
awarded as Restricted Shares or Options or that are subject to outstanding
awards, and the option price per share under outstanding Options, shall be
adjusted automatically to prevent dilution or enlargement of rights.
12. Termination or Amendment of the Plan
The Board may at any time terminate the Plan and may from time to time
alter or amend the Plan or any part thereof (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Section 10), provided that, unless otherwise required by law, the
rights of a Participant with respect to Restricted Shares and Options granted
prior to such termination, alteration or amendment may not be impaired without
the consent of such Participant and, further, that without the approval of the
Company's shareowners, no amendment shall be made if shareowner approval is
required by law or in order to comply with Rule 16b-3 under Section 16 of the
Securities Exchange Act of 1934, as amended from time to time. Notwithstanding
the foregoing, Plan provisions relating to eligibility and to the amount, timing
and pricing of grants shall not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.
C-4
<PAGE>
13. Miscellaneous
(a) Nothing in the Plan shall be deemed to create any obligation on the
part of the Board to nominate any director for reelection by the Company's
shareowners.
(b) The Company shall have the right to require, prior to the issuance or
delivery of any Restricted Shares or issuance and delivery of Common Stock upon
the exercise of Options, payment by the Participant of any taxes required by law
with respect to the issuance or delivery of such shares. Such amount may be paid
in cash, in shares of Common Stock previously owned by the Participant, by
withholding a portion of the shares of Common Stock that otherwise would be
distributed to such Participant upon delivery of the Restricted Shares or
exercise of an Option or a combination of cash and shares of Common Stock.
(c) The shares of Common Stock granted as Restricted Shares or issued upon
the exercise of Options under the Plan may be either authorized but unissued
shares or shares which have been or may be reacquired by the Company, as
determined from time to time by the Board.
C-5
<PAGE>
DIRECTIONS TO COMPANY HEADQUARTERS
101 COLUMBIA ROAD, MORRIS TOWNSHIP, N.J.
[AREA MAP]
FROM RTE. 80 (EAST OR WEST) AND RTE. 287 SOUTH:
Take Rte. 80 to Rte. 287 South to Exit 37 (Rte. 24 East -- Springfield). Follow
Rte. 24 East to Exit 2A (Rte. 510 West -- Morristown), which exits onto Columbia
Road. At second traffic light, make left into AlliedSignal.
FROM RTE. 287 NORTH:
Take Rte. 287 North to Exit 37 (Rte. 24 East -- Springfield). Follow Rte. 24
East to Exit 2A (Rte. 510 West -- Morristown), which exits onto Columbia Road.
At second traffic light, make left into AlliedSignal.
FROM NEWARK INTERNATIONAL AIRPORT:
Take Rte. 78 West to Rte. 24 West to Exit 2A (Rte. 510 West -- Morristown),
which exits onto Columbia Road. At second traffic light, make left into
AlliedSignal.
<PAGE>
[LOGO]
NOTICE OF 1994 ANNUAL MEETING
AND PROXY STATEMENT
<PAGE>
APPENDIX
Graphic and Image Information
See the narrative descriptions of:
PHOTOS OF DIRECTORS ON PAGES 2 THROUGH 7 OF N&PS
PERFORMANCE GRAPH ON PAGE 17 OF N&PS
AREA MAP ON INSIDE BACK COVER OF N&PS
<PAGE>
[LOGO] PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLIEDSIGNAL INC.
ANNUAL MEETING OF SHAREOWNERS -- APRIL 25, 1994
The undersigned hereby appoints LAWRENCE A. BOSSIDY, PETER M. KREINDLER and
ANDREW B. SAMET as proxies (each with power to act alone and with full power of
substitution) to vote, as designated herein, all shares the undersigned is
entitled to vote at the Annual Meeting of Shareowners of AlliedSignal Inc. to be
held on April 25, 1994, and at any and all adjournments thereof. The proxies are
authorized to vote in their discretion upon such other business as may properly
come before the Meeting and any and all adjournments thereof.
- ----------------------------------------------------------
Your vote for the election of Directors and the other proposals described
in the accompanying Proxy Statement may be specified on the reverse side. The
nominees for Director are: Lawrence A. Bossidy, Ann M. Fudge, William R.
Haselton, Paul X. Kelley, Delbert C. Staley and Robert C. Winters.
BECAUSE THE ANNUAL MEETING RECORD DATE PRECEDES THE DISTRIBUTION OF SHARES
PURSUANT TO A TWO-FOR-ONE SPLIT OF THE COMMON STOCK DECLARED BY THE BOARD OF
DIRECTORS ON FEBRUARY 7, 1994, VOTES WILL BE CALCULATED ON A PRE-SPLIT BASIS AND
INFORMATION ON THIS PROXY CARD REGARDING THE NUMBER OF SHARES OWNED IS ON A
PRE-SPLIT BASIS.
IF PROPERLY SIGNED, DATED AND RETURNED, THIS PROXY WILL BE VOTED AS
SPECIFIED ON THE REVERSE SIDE OR, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE
VOTED 'FOR' THE ELECTION OF ALL NOMINEES FOR DIRECTOR, 'FOR' PROPOSALS 2, 3, 4
AND 5 AND 'AGAINST' PROPOSALS 6 AND 7.
[SPECIFY CHOICES AND SIGN ON THE REVERSE SIDE]
<PAGE>[ ]
PLEASE MARK BOXES [ ] OR [X] IN BLUE OR BLACK INK.
A VOTE 'FOR' PROPOSALS 1, 2, 3, 4 AND 5 IS RECOMMENDED BY THE BOARD OF
DIRECTORS:
1. Election of Directors (see list on other side)
[ ] FOR [ ] WITHHOLD AUTHORITY [ ] EXCEPTION (see
all nominees to vote for all nominees Instruction to the right)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
the 'Exception' box and write the name(s) on the line below.
______________________________________________________________________________
2. Amendment of 1993 Stock Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Amendment of Incentive Compensation Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Amendment of Directors' Stock Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Appointment of Independent Accountants
FOR [ ] AGAINST [ ] ABSTAIN [ ]
A VOTE 'AGAINST' PROPOSALS 6 AND 7 IS RECOMMENDED BY THE BOARD OF DIRECTORS:
6. Proposal regarding directors' tenure
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. Proposal regarding executive compensation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS ON
THIS PROXY. Joint owners should all
sign. Executors, administrators,
trustees and others acting in a
representative capacity should
indicate title when signing.
Dated .........................., 1994
(Please Insert Date)
Signed ...............................
PLEASE SIGN, DATE AND RETURN THIS
PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please mark box if you want your vote
kept confidential under the policy
described on page 1 of the Proxy
Statement. [ ]
<PAGE>
REQUEST FOR CONFIDENTIAL INSTRUCTIONS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLIEDSIGNAL INC.
PURSUANT TO THE ALLIEDSIGNAL SAVINGS PLAN (THE 'PLAN')
The undersigned hereby instructs State Street Bank and Trust Company,
Trustee under the Plan, to vote, as designated herein, all shares of Common
Stock with respect to which the undersigned is entitled to instruct the Trustee
as to voting under the Plan at the Annual Meeting of Shareowners of AlliedSignal
Inc. to be held on April 25, 1994, and at any and all adjournments thereof. The
Trustee is also authorized to vote such shares in connection with the
transaction of such other business as may properly come before the Meeting and
any and all adjournments thereof.
- ----------------------------------------------------------
Your vote for the election of Directors and the other proposals described
in the accompanying Proxy Statement may be specified on the reverse side. The
nominees for Director are: Lawrence A. Bossidy, Ann M. Fudge, William R.
Haselton, Paul X. Kelley, Delbert C. Staley and Robert C. Winters.
BECAUSE THE ANNUAL MEETING RECORD DATE PRECEDES THE DISTRIBUTION OF SHARES
PURSUANT TO A TWO-FOR-ONE SPLIT OF THE COMMON STOCK DECLARED BY THE BOARD OF
DIRECTORS ON FEBRUARY 7, 1994, VOTES WILL BE CALCULATED ON A PRE-SPLIT BASIS AND
INFORMATION ON THIS INSTRUCTION CARD REGARDING THE NUMBER OF SHARES YOU ARE
ENTITLED TO VOTE IS ON A PRE-SPLIT BASIS.
IF THIS CARD IS PROPERLY SIGNED AND RETURNED, THE SHARES WILL BE VOTED AS
SPECIFIED HEREIN OR, IF NO CHOICE IS SPECIFIED, THEY WILL BE VOTED 'FOR' THE
ELECTION OF ALL NOMINEES FOR DIRECTOR, 'FOR' PROPOSALS 2, 3, 4 AND 5 AND
'AGAINST' PROPOSALS 6 AND 7. THE TRUSTEE WILL VOTE SHARES AS TO WHICH NO
INSTRUCTIONS ARE RECEIVED IN THE SAME RATIO AS SHARES WITH RESPECT TO WHICH
INSTRUCTIONS HAVE BEEN RECEIVED FROM OTHER PARTICIPANTS IN THE PLAN.
[CONTINUE AND SIGN ON THE REVERSE SIDE]
<PAGE>
A VOTE 'FOR' PROPOSALS 1, 2, 3, 4 AND 5 IS RECOMMENDED BY THE BOARD OF
DIRECTORS:
1. Election of Directors (see list on other side)
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
(except as noted to the right) to vote for all nominees
INSTRUCTION: To withhold authority to vote for any individual
nominee(s), write the name(s) on the line below.
_____________________________________________________________
2. Amendment of 1993 Stock Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Amendment of Incentive Compensation Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Amendment of Directors' Stock Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Appointment of Independent Accountants
FOR [ ] AGAINST [ ] ABSTAIN [ ]
A VOTE 'AGAINST' PROPOSALS 6 AND 7 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:
6. Proposal regarding directors' tenure
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. Proposal regarding executive compensation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS.
Dated____________________________________________, 1994
(Please Insert Date)
Signed________________________________________________
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
REQUEST FOR CONFIDENTIAL INSTRUCTIONS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLIEDSIGNAL INC.
PURSUANT TO THE ALLIEDSIGNAL THRIFT PLAN (THE 'PLAN')
The undersigned hereby instructs State Street Bank and Trust Company,
Trustee under the Plan, to vote, as designated herein, all shares of Common
Stock with respect to which the undersigned is entitled to instruct the Trustee
as to voting under the Plan at the Annual Meeting of Shareowners of AlliedSignal
Inc. to be held on April 25, 1994, and at any and all adjournments thereof. The
Trustee is also authorized to vote such shares in connection with the
transaction of such other business as may properly come before the Meeting and
any and all adjournments thereof.
- ----------------------------------------------------------
Your vote for the election of Directors and the other proposals described
in the accompanying Proxy Statement may be specified on the reverse side. The
nominees for Director are: Lawrence A. Bossidy, Ann M. Fudge, William R.
Haselton, Paul X. Kelley, Delbert C. Staley and Robert C. Winters.
BECAUSE THE ANNUAL MEETING RECORD DATE PRECEDES THE DISTRIBUTION OF SHARES
PURSUANT TO A TWO-FOR-ONE SPLIT OF THE COMMON STOCK DECLARED BY THE BOARD OF
DIRECTORS ON FEBRUARY 7, 1994, VOTES WILL BE CALCULATED ON A PRE-SPLIT BASIS AND
INFORMATION ON THIS INSTRUCTION CARD REGARDING THE NUMBER OF SHARES YOU ARE
ENTITLED TO VOTE IS ON A PRE-SPLIT BASIS.
IF THIS CARD IS PROPERLY SIGNED AND RETURNED, THE SHARES WILL BE VOTED AS
SPECIFIED HEREIN
OR, IF NO CHOICE IS SPECIFIED, THEY WILL BE VOTED 'FOR' THE ELECTION OF ALL
NOMINEES FOR DIRECTOR, 'FOR' PROPOSALS 2, 3, 4 AND 5 AND 'AGAINST' PROPOSALS 6
AND 7. THE TRUSTEE WILL VOTE SHARES AS TO WHICH NO INSTRUCTIONS ARE RECEIVED IN
THE SAME RATIO AS SHARES WITH RESPECT TO WHICH INSTRUCTIONS HAVE BEEN RECEIVED
FROM OTHER PARTICIPANTS IN THE PLAN.
[CONTINUE AND SIGN ON THE REVERSE SIDE]
<PAGE>
A VOTE 'FOR' PROPOSALS 1, 2, 3, 4 AND 5 IS RECOMMENDED BY THE BOARD OF
DIRECTORS:
1. Election of Directors (see list on other side)
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
(except as noted to the right) to vote for all nominees
INSTRUCTION: To withhold authority to vote for any individual
nominee(s), write the name(s) on the line below.
_____________________________________________________________
2. Amendment of 1993 Stock Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Amendment of Incentive Compensation Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Amendment of Directors' Stock Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Appointment of Independent Accountants
FOR [ ] AGAINST [ ] ABSTAIN [ ]
A VOTE 'AGAINST' PROPOSALS 6 AND 7 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:
6. Proposal regarding directors' tenure
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. Proposal regarding executive compensation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS.
Dated____________________________________________, 1994
(Please Insert Date)
Signed________________________________________________
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
REQUEST FOR CONFIDENTIAL INSTRUCTIONS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLIEDSIGNAL INC.
PURSUANT TO THE ALLIEDSIGNAL TRUCK BRAKE SYSTEMS COMPANY SAVINGS PLAN (THE
'PLAN')
The undersigned hereby instructs State Street Bank and Trust Company,
Trustee under the Plan, to vote, as designated herein, all shares of Common
Stock with respect to which the undersigned is entitled to instruct the Trustee
as to voting under the Plan at the Annual Meeting of Shareowners of AlliedSignal
Inc. to be held on April 25, 1994, and at any and all adjournments thereof. The
Trustee is also authorized to vote such shares in connection with the
transaction of such other business as may properly come before the Meeting and
any and all adjournments thereof.
- ----------------------------------------------------------
Your vote for the election of Directors and the other proposals described
in the accompanying Proxy Statement may be specified on the reverse side. The
nominees for Director are: Lawrence A. Bossidy, Ann M. Fudge, William R.
Haselton, Paul X. Kelley, Delbert C. Staley and Robert C. Winters.
BECAUSE THE ANNUAL MEETING RECORD DATE PRECEDES THE DISTRIBUTION OF SHARES
PURSUANT TO A TWO-FOR-ONE SPLIT OF THE COMMON STOCK DECLARED BY THE BOARD OF
DIRECTORS ON FEBRUARY 7, 1994, VOTES WILL BE CALCULATED ON A PRE-SPLIT BASIS AND
INFORMATION ON THIS INSTRUCTION CARD REGARDING THE NUMBER OF SHARES YOU ARE
ENTITLED TO VOTE IS ON A PRE-SPLIT BASIS.
IF THIS CARD IS PROPERLY SIGNED AND RETURNED, THE SHARES WILL BE VOTED AS
SPECIFIED HEREIN
OR, IF NO CHOICE IS SPECIFIED, THEY WILL BE VOTED 'FOR' THE ELECTION OF ALL
NOMINEES FOR DIRECTOR, 'FOR' PROPOSALS 2, 3, 4 AND 5 AND 'AGAINST' PROPOSALS 6
AND 7. THE TRUSTEE WILL VOTE SHARES AS TO WHICH NO INSTRUCTIONS ARE RECEIVED IN
THE SAME RATIO AS SHARES WITH RESPECT TO WHICH INSTRUCTIONS HAVE BEEN RECEIVED
FROM OTHER PARTICIPANTS IN THE PLAN.
[CONTINUE AND SIGN ON THE REVERSE SIDE]
<PAGE>
A VOTE 'FOR' PROPOSALS 1, 2, 3, 4 AND 5 IS RECOMMENDED BY THE BOARD OF
DIRECTORS:
1. Election of Directors (see list on other side)
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
(except as noted to the right) to vote for all nominees
INSTRUCTION: To withhold authority to vote for any individual
nominee(s), write the name(s) on the line below.
_____________________________________________________________
2. Amendment of 1993 Stock Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Amendment of Incentive Compensation Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Amendment of Directors' Stock Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Appointment of Independent Accountants
FOR [ ] AGAINST [ ] ABSTAIN [ ]
A VOTE 'AGAINST' PROPOSALS 6 AND 7 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:
6. Proposal regarding directors' tenure
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. Proposal regarding executive compensation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS.
Dated____________________________________________, 1994
(Please Insert Date)
Signed________________________________________________
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
[LOGO] AlliedSignal Inc.
P.O. Box 3000
Morristown, NJ 07962-2496
LARRY BOSSIDY
Chairman and
Chief Executive Officer
March 10, 1994
Dear Plan Participant:
Thanks to the outstanding efforts of our employees, 1993 was another great year
for AlliedSignal, with net earnings reaching a record level. Our strong
financial performance has been recognized by investors and reflected in the
Company's stock price, which grew by another 31% last year and resulted in the
declaration of a two-for-one stock split by the Board of Directors. Employee
savings plans hold about 14% of our outstanding shares, and we are pleased that
plan participants are benefiting from the Company's improved performance.
Enclosed is a meeting notice and proxy statement for the 1994 Annual Meeting of
Shareowners. As a participant in either the Savings Plan or Thrift Plan, you are
entitled to instruct the Trustee, State Street Bank and Trust Company, how to
vote the AlliedSignal shares attributable to your plan account. The proxy
statement includes the proposals to be voted on, as well as the recommendations
of the Board of Directors. A voting instruction card is enclosed for your use.
This is your opportunity to have the plan shares voted in accordance with your
wishes. All votes, especially those of current and former employees, are
important and I urge you to exercise your right to vote by completing the
confidential instruction card at your earliest convenience.
If you own AlliedSignal shares other than through the plans, you will receive a
separate proxy card for those shares. In order to vote all your shares, you
should return your plan instruction card in the enclosed envelope to the Trustee
and return any proxy card for other shares in the separate envelope provided
with that card.
Thanks again for your efforts. I look forward to your continuing support.
Sincerely,
Larry Bossidy
Enclosures
<PAGE>
[LOGO]
AlliedSignal Inc.
P.O. Box 3000
Morristown, NJ 07962-2496
LARRY BOSSIDY
Chairman and
Chief Executive Officer
March 10, 1994
Dear Participant in the AlliedSignal Truck Brake Savings Plan:
As you know, 1993 was another great year for AlliedSignal, with net earnings
reaching a record level. The Company's strong financial performance has been
recognized by investors and reflected in the Company's stock price, which grew
by another 31% last year and resulted in the declaration of a two-for-one stock
split by the Board of Directors. We are pleased that plan participants are
benefiting from the Company's improved performance.
Enclosed is a meeting notice and proxy statement for the 1994 Annual Meeting of
Shareowners. As a participant in the AlliedSignal Truck Brake Systems Company
Savings Plan, you are entitled to instruct the Trustee, State Street Bank and
Trust Company, how to vote the AlliedSignal shares attributable to your plan
account. The proxy statement includes the proposals to be voted on, as well as
the recommendations of the Board of Directors. A voting instruction card is
enclosed for your use.
This is your opportunity to have the plan shares voted in accordance with your
wishes. All votes are important and I urge you to exercise your right to vote by
completing the confidential instruction card at your earliest convenience.
If you own AlliedSignal shares other than through the plan, you will receive a
separate proxy card for those shares. In order to vote all your shares, you
should return your plan instruction card in the enclosed envelope to the Trustee
and return any proxy card for other shares in the separate envelope provided
with that card.
I look forward to your continuing support.
Sincerely,
Larry Bossidy
Enclosures
