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Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
AlliedSignal Inc.
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and state
how it was determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
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[LOGO]
AlliedSignal Inc.
P.O. Box 3000
Morristown, NJ 07962-2496
LARRY BOSSIDY
Chairman and
Chief Executive Officer
March 9, 1999
Dear Shareowner:
It is my pleasure to invite you to attend AlliedSignal's 1999 Annual Meeting of
Shareowners. The meeting will be held on Monday, April 26, 1999 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 progress during 1998
and on our goals for 1999. We welcome this opportunity to have a dialogue with
our shareowners and look forward to your comments and questions.
It is important that your shares be represented at the meeting, regardless of
the number you may hold and whether or not you plan to attend. If you are a
shareowner of record, you will be able to vote your shares this year by using a
convenient, new toll-free telephone number, as described on the instructions
accompanying your proxy card. Of course, you may still vote your shares by
signing and dating your proxy card and returning it in the postage-paid envelope
provided. Voting by either method will not prevent you from voting your shares
in person if you are present at the meeting.
If you are a shareowner of record who plans to attend the meeting, please mark
the appropriate box on your proxy card or follow the instructions provided when
you vote by telephone. If your shares are held by a bank, broker or other
intermediary and you plan to attend, please send written notification to
AlliedSignal Shareowner Services, P.O. Box 50000, Morristown, New Jersey 07962,
and enclose evidence of your ownership (such as a letter from the bank, broker
or intermediary confirming your ownership or a bank or brokerage firm account
statement). The names of all those planning to attend will be placed on an
admission list held at the registration desk at the entrance to the meeting.
A map and directions to the Company's headquarters appear at the end of the
Proxy Statement. I look forward to seeing you on April 26.
Sincerely,
Larry Bossidy
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NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareowners of AlliedSignal Inc. (the 'Company') will
be held on Monday, April 26, 1999 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 five directors;
(2) Appointment of PricewaterhouseCoopers LLP as independent accountants
for 1999;
(3) A shareowner proposal regarding CEO compensation;
(4) A shareowner proposal regarding the annual election of directors; and
to transact 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, 1999, are entitled
to notice of and to vote at the meeting.
By Order of the Board of Directors
PETER M. KREINDLER
Senior Vice President,
General Counsel and Secretary
AlliedSignal Inc.
101 Columbia Road
Morris Township, NJ 07962
March 9, 1999
YOUR VOTE IS IMPORTANT
To be sure your shares are represented at the meeting,
please vote by telephone or complete and return your
proxy card in the enclosed postage-paid envelope as
soon as possible. You may vote in person at the
meeting even if you vote by telephone or send in your
proxy card.
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<TABLE>
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Table of Contents Page
<S> <C>
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General Information.................................................................................. 1
1 -- Election of Directors........................................................................... 2
The Board of Directors and Committees of the Board.............................................. 8
Compensation of Directors....................................................................... 9
Voting Securities.................................................................................... 10
Executive Compensation............................................................................... 12
2 -- Appointment of Independent Accountants.......................................................... 20
Shareowner Proposals................................................................................. 21
3 -- Proposal regarding CEO compensation........................................................ 21
4 -- Proposal regarding the annual election of directors........................................ 23
Additional Information............................................................................... 25
Directions to Company Headquarters................................................................... A-1
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PROXY STATEMENT
GENERAL INFORMATION
Introduction. 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 26, 1999, 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 9, 1999.
Record Date and Quorum. Owners of record of the Company's Common Stock (the
'Common Stock') at the close of business on March 1, 1999, are entitled to
notice of and to vote at the Annual Meeting. Shareowners are entitled to one
vote for each share held. At February 23, 1999, there were 558,415,182 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.
Proxy Voting. As indicated on the instructions accompanying the proxy card,
the Company this year is offering shareowners of record the choice of voting by
completing and returning the proxy card or by calling a specially designated
toll-free telephone number. The shares represented by a properly signed and
returned proxy card or voted by telephone 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) and the appointment of independent accountants (Proposal 2) and
AGAINST the shareowner proposals described in this Proxy Statement (Proposals 3
and 4). 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
card bearing a later date or by a later telephone vote, or by voting in person
at the Annual Meeting.
Abstentions and Broker Non-Votes. 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 4 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 3 and 4 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.
Confidentiality. It is the policy of the Company that any proxy, ballot or
other voting material that identifies the particular vote of a shareowner and
contains the shareowner's request for confidential treatment will 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 five candidates for election as directors for a term ending
at the 2002 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 current directors were previously elected by the shareowners, except
Marshall N. Carter, who joined the Board of Directors in March 1999. General
Paul X. Kelley, whose term expires at the 1999 Annual Meeting, has reached
retirement age and will serve until the Annual Meeting pursuant to the
directors' retirement policy. Each nominee for election 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 or voted by telephone 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
or reduce the authorized number of directors pursuant to the By-laws. All
directors serve subject to the retirement policy described on page 8.
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 2002
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<S> <C> <C>
[Photo of Hans HANS W. BECHERER, Chairman and Chief Executive Officer of Deere & Company
W. Becherer]
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 also a director
of The Chase Manhattan Corporation and Schering-Plough Corporation.
Director since 1991 Age 63
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2
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[Photo of Marshall MARSHALL N. CARTER, Chairman and Chief Executive Officer of State Street Corporation
N. Carter]
Mr. Carter joined State Street Corporation and its principal subsidiary, State Street
Bank and Trust Company, as President and Chief Operating Officer in 1991. He became
Chief Executive Officer in 1992 and Chairman of the Board in 1993. State Street is a
provider of services to institutional investors worldwide. Prior to joining State
Street, Mr. Carter was with Chase Manhattan Bank for 15 years, and before that he served
as an officer in the U.S. Marine Corps.
Director since 1999 Age 58
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[Photo of Robert ROBERT P. LUCIANO, Retired Chairman and Chief Executive Officer of Schering-Plough
P. Luciano] 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, Chief Executive Officer from 1982 through 1995, and Chairman of the Board from
1984 through October 1998. He is a director of C.R. Bard, Inc., Merrill Lynch & Co. and
Schering-Plough Corporation.
Director since 1989 Age 65
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[Photo of Robert ROBERT B. PALMER, Former Chairman, President and Chief Executive Officer of Digital
B. Palmer] Equipment Corporation
Mr. Palmer joined Digital Equipment Corporation, a provider of networked computer
systems, software and services, in 1985. He advanced through a series of executive
positions until he became President and Chief Executive Officer in 1992 and Chairman of
the Board in 1995. He held those positions until mid-1998, when Digital was acquired by
Compaq Computer Corporation.
Director since 1995 Age 58
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</TABLE>
3
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[Photo of John R. JOHN R. STAFFORD, Chairman, President and Chief Executive Officer of American Home
Stafford] Products Corporation
Mr. Stafford has held a number of positions with American Home Products, a manufacturer
of pharmaceutical, health care, animal health and agricultural 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 also a director of Bell Atlantic
Corporation, The Chase Manhattan Corporation and Deere & Company.
Director since 1993 Age 61
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INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 2000
[Photo of Lawrence LAWRENCE A. BOSSIDY, Chairman of the Board and Chief Executive Officer of the Company
A. Bossidy]
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 Corporation) 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 Champion International Corporation, J. P.
Morgan & Co. Incorporated and Merck & Co., Inc.
Director since 1991 Age 64
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</TABLE>
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<TABLE>
<S> <C> <C>
[Photo of Ann ANN M. FUDGE, Executive Vice President of Kraft Foods, Inc.
M. Fudge]
Ms. Fudge joined General Foods USA in 1986 and held several planning and marketing
positions before being appointed Executive Vice President and General Manager of the
Dinners and Enhancers Division in 1991. In 1994, she was named President of Kraft
General Foods' Maxwell House Coffee Company. In 1995, Ms. Fudge assumed her current
position, while continuing to head the Maxwell House Coffee Division as General Manager.
She became President of Kraft's Maxwell House and Post Division in 1997. Kraft is the
multinational food business of Philip Morris Companies Inc. Ms. Fudge is a director of
Liz Claiborne, Inc.
Director since 1993 Age 47
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[Photo of Frederic FREDERIC M. POSES, President and Chief Operating Officer of the Company
M. Poses]
Mr. Poses began his career with the Company in 1969 and advanced through a number of
managerial and executive positions until he was named President of the Plastics and
Engineered Materials Division in 1983, President of the Fibers Division in 1986, and
President of AlliedSignal Engineered Materials in 1988, when he was also elected
Executive Vice President of the Company. In 1997, he was elected Vice Chairman and a
member of the Board of Directors, and in mid-1998 he assumed his current position.
Director since 1997 Age 56
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[Photo of Robert ROBERT C. WINTERS, Chairman Emeritus of The Prudential Insurance Company of America
C. Winters]
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. He retired as Chairman and Chief Executive Officer and
became Chairman Emeritus in 1994.
Director since 1989 Age 67
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</TABLE>
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<S> <C> <C>
[Photo of Henry HENRY T. YANG, Chancellor of the University of California, Santa Barbara
T. Yang]
Dr. Yang became Chancellor of the University of California, Santa Barbara in 1994. Prior
to his current position, he served in a number of faculty and administrative positions
at Purdue University starting in 1969. He became Head of Purdue's School of Aeronautics
and Astronautics in 1979 and served as Dean of the Schools of Engineering and Director
of the Computer Integrated Design, Manufacturing and Automation Center from 1984 until
he joined the University of California.
Director since 1996 Age 58
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INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 2001
[Photo of Russell RUSSELL E. PALMER, Chairman and Chief Executive Officer of The Palmer Group
E. Palmer]
Mr. Palmer established The Palmer Group, a private investment firm, in 1990, after
serving seven years as Dean of The Wharton School of the University of Pennsylvania. 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, Federal Home Loan Mortgage Corporation, GTE Corporation, The
May Department Stores Company and Safeguard Scientifics, Inc.
Director since 1987 Age 64
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<TABLE>
<S> <C> <C>
[Photo of Ivan IVAN G. SEIDENBERG, Chairman and Chief Executive Officer of Bell Atlantic Corporation
G. Seidenberg]
Mr. Seidenberg assumed his current position with Bell Atlantic Corporation, a
telecommunications and information services provider, in January 1999. He previously
served as Vice Chairman, President and Chief Executive Officer since June 1998, and Vice
Chairman, President and Chief Operating Officer following the merger of NYNEX
Corporation and Bell Atlantic in 1997. He had joined NYNEX in 1983 and served in several
senior management positions before becoming a director and Vice Chairman of the Board in
1991, President and Chief Operating Officer in 1994, and Chairman and Chief Executive
Officer in 1995. He is also a director of American Home Products Corporation, Boston
Properties, Inc., CVS Corporation and Viacom Inc.
Director since 1995 Age 52
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[Photo of Andrew ANDREW C. SIGLER, Retired Chairman and Chief Executive Officer of Champion International
C. Sigler] 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 served as Chairman and Chief Executive Officer from 1979 until his retirement in
1996. He is a director of The Chase Manhattan Corporation and General Electric Company.
Director since 1994 Age 67
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[Photo of Thomas THOMAS P. STAFFORD, Consultant, General Technical Services, Inc.
P. Stafford]
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, Cycomm International Inc., Seagate Technology
Inc., Timet Inc. and Tremont Corporation.
Director since 1981 Age 68
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7
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THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Meetings and Attendance. The business of the Company is managed under the
direction of the Board of Directors. There were 13 meetings of the Board and 20
meetings of the various Committees of the Board in 1998. Average attendance by
incumbent directors at all meetings of the Board and Board Committees on which
they served was 89%, with each director attending at least 75% of such meetings,
except Mr. Russell Palmer, who attended 74%.
Retirement Policy. The Board of Directors' retirement policy establishes 70
as the retirement age for non-employee directors. 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 shall resign from the Board effective upon termination
of service as an active employee of the Company. The Board has discretion to
make exceptions to the policy.
Board Committees. 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. Each Committee is composed entirely of non-employee directors.
The functions of these Committees, their current members and the number of
meetings held during 1998 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; and considers
the accountants' independence. The members of the Committee, which met five
times in 1998, are Messrs. R. E. Palmer (Chairman), Becherer, J. Stafford and
Winters, Ms. Fudge and Gen. Kelley.
The Corporate Governance Committee reviews policies and makes
recommendations to the Board, as appropriate, concerning Board-related issues,
such as the size and composition of the Board, the criteria and qualifications
for election to the Board, retirement from the Board, director compensation and
benefits, and the structure, composition and membership of Board Committees.
This Committee also considers and recommends 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
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at the Meeting' for a summary of the procedure applicable to a shareowner
nomination at an annual meeting.) This Committee is responsible for the periodic
review of the overall effectiveness of the Board and, when appropriate, making
recommendations for improvements. The members of the Committee, which met two
times in 1998, are Messrs. Becherer (Chairman), Luciano, R. E. Palmer,
Seidenberg and Winters.
The Corporate Responsibility Committee reviews the policies and programs
that are designed to assure the Company's compliance with legal and ethical
standards and that 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 Gen. Kelley (Chairman), Ms. Fudge, Messrs. R.
B. Palmer and Sigler, Lt. Gen. T. Stafford and Dr. Yang. It met three times in
1998.
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 1998. The Committee members are Messrs.
Luciano (Chairman), Becherer, Seidenberg, Sigler and J. Stafford.
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 investing fund assets. This Committee met
three times in 1998. Its members are Messrs. Winters (Chairman), Luciano, R. E.
Palmer, Sigler and J. Stafford and Ms. Fudge.
The Technology Committee reviews 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 technologies of
importance to the Company's existing or new business areas. The members of the
Committee are Lt. Gen. T. Stafford (Chairman), Gen. Kelley, Messrs. R. B. Palmer
and Seidenberg and Dr. Yang. It met two times in 1998.
COMPENSATION OF DIRECTORS
Retainers and Fees. Non-employee directors receive an annual Board retainer
of $50,000, of which $15,000 is automatically credited to each director's
account in the Deferred Compensation Plan for Non-Employee Directors (the
'Deferred Compensation Plan') in the form of Common Stock equivalents (which are
only payable after termination of Board service). They also receive a fee of
$1,500 for Board meetings attended on any day (13 during 1998), an annual
retainer of $5,400 for each Board Committee served, and an additional Committee
Chairman 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 $1,000
fee is paid 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
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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.
Deferred Compensation Plan. Directors may elect to defer, until a specified
calendar year or retirement from the Board, all or any portion of their annual
retainers and fees that are not automatically deferred and to have such
compensation credited to their account in the Deferred Compensation Plan.
Amounts credited either accrue amounts equivalent to interest at the same rate
as that determined by the Management Development and Compensation Committee for
amounts deferred during the same year under the Company's incentive compensation
plan (11% for 1999) or are valued as if invested in Common Stock equivalents or
one of the other funds available for investments by participants in the
AlliedSignal Savings Plan, as elected by the director. All amounts credited as
Common Stock equivalents under the Deferred Compensation Plan will earn amounts
equivalent to dividends, which will be credited to the directors' accounts as if
reinvested in Common Stock, and all such deferred amounts will be paid in cash
following termination of Board service. Common Stock equivalents credited to
directors' deferred accounts are included in the table set forth below under
'Voting Securities.' Upon a change in control, a director will be entitled to a
lump-sum cash payment of all deferred amounts.
Stock Plan. Under the Stock Plan for Non-Employee Directors, each new
non-employee director receives a one-time grant of 3,000 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 entitled to one-fifth
of the shares granted for each year of service (up to five). 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. The Plan also provides
for the grant to each non-employee director continuing in office after an Annual
Meeting of an option to purchase 2,000 shares of Common Stock at 100% of the
fair market value of the Common Stock on the date of grant. Each option becomes
fully vested at the earliest of the director's retirement from the Board at or
after age 70, death, disability or April 1 of the third year after the date of
grant. Prior thereto, each option becomes exercisable in cumulative installments
of 40% of the shares subject to the option on April 1 of the year following the
grant date and an additional 30% on April 1 of each of the next two years.
VOTING SECURITIES
As of January 1, 1999, State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02101 ('State Street'), held 57,397,096 shares, or
approximately 10.3%, 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 does not receive
instructions in the same ratio as the shares for which instructions were
received. State Street disclaims beneficial ownership of the shares referred to
above. State Street also held 7,739,001
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shares, or approximately 1.4%, of the outstanding Common Stock in various other
fiduciary capacities, with sole voting power as to 6,876,230 shares, shared
voting power as to 292,052 shares, sole investment power as to 7,540,377 shares,
and shared investment power as to 198,624 shares.
Set forth below is certain information with respect to ownership of the
Common Stock as of February 23, 1999 by each director, by each named executive
officer, and by all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Number of
Name Shares(1)(2)(3)
- ------------------------------------------------------------- ---------------
<S> <C>
Hans W. Becherer............................................. 24,974
Lawrence A. Bossidy.......................................... 4,438,814
Marshall N. Carter........................................... 4,500(4)
Ann M. Fudge................................................. 15,564
Paul X. Kelley............................................... 33,246
Peter M. Kreindler........................................... 315,099
Robert P. Luciano............................................ 20,609
Robert B. Palmer............................................. 10,053
Russell E. Palmer............................................ 17,359
Frederic M. Poses............................................ 1,030,322
Donald J. Redlinger.......................................... 465,709
Ivan G. Seidenberg........................................... 14,202
Andrew C. Sigler............................................. 27,208
John R. Stafford............................................. 37,384
Thomas P. Stafford........................................... 30,667
Richard F. Wallman........................................... 235,278
Robert C. Winters............................................ 32,813
Henry T. Yang................................................ 8,019
All directors and executive officers as a group.............. 7,356,916
</TABLE>
- ------------
(1) The total for any individual is less than 0.8%, and the total for the group
is less than 1.4%, of the shares of Common Stock outstanding.
(2) Includes (a) shares held individually, jointly with others or in the name of
a family member or of a bank, broker or nominee for the individual's
account, (b) whole shares attributable to participants in the Dividend
Reinvestment and Share Purchase Plan and the AlliedSignal Savings Plan, (c)
restricted shares as to which directors have sole voting power but no
investment power prior to the lapse of restrictions, and (d) the following
number of shares or share-equivalents in deferred accounts, as to which no
voting or investment power exists: Mr. Becherer, 10,594; Mr. Bossidy,
21,039; Ms. Fudge, 1,364; Gen. Kelley, 13,515; Mr. Kreindler, 20,406; Mr.
Luciano, 4,409; Mr. R. B. Palmer, 2,853; Mr. R. E. Palmer, 4,159; Mr. Poses,
191,134; Mr. Redlinger, 21,714; Mr. Seidenberg, 5,002; Mr. Sigler, 9,008;
Mr. J. Stafford, 7,184; Lt. Gen. T. Stafford, 13,356,; Mr. Wallman, 20,891;
Mr. Winters, 7,098; Dr. Yang, 2,819; and all directors and executive
officers as a group, 361,078.
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(3) Includes shares which the following have the right to acquire within 60 days
through the exercise of vested stock options: Mr. Bossidy, 3,540,000; Mr.
Kreindler, 282,000; Mr. R. B. Palmer, 4,200; Mr. R. E. Palmer, 6,200; Mr.
Poses, 795,000; Mr. Redlinger, 427,000; Mr. Seidenberg, 6,200; Mr. Wallman,
214,000; Dr. Yang, 2,200; each other non-employee director, 8,200; and all
directors and executive officers as a group, 5,916,861; no voting or
investment power exists with respect to such shares prior to acquisition.
(4) As of March 1, 1999.
------------------------
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file reports relating to their ownership and
changes in ownership of the Common Stock with the Securities and Exchange
Commission and New York Stock Exchange. Based on information provided by the
Company's directors and executive officers and a review of such reports, the
Company believes that all required reports were filed on a timely basis during
1998.
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
entirely 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 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.'
12
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<PAGE>
Base pay. Base pay is designed to be competitive within 20% above or below
median salary levels at other large industrial companies for equivalent
positions. The executive's actual salary relative to this competitive framework
varies based on individual performance and the individual's skills, experience
and background.
Annual incentive bonus. For 1998, each executive was eligible to receive an
annual cash bonus. Award levels, like the base salary levels, are set with
reference to competitive conditions and are intended to motivate the Company's
executives by providing substantial bonus payments for the achievement of
aggressive goals. The actual amounts paid were determined by performance based
on two factors: first, financial performance, which was measured against
objectives established for cash flow, productivity increases and revenue growth;
and second, the individual executive's performance against other specific
management objectives, such as increasing the use of Six Sigma processes and
improving customer satisfaction. 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 incentive compensation. 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. The long-term incentive component of the compensation
system (through extended vesting) also is designed to create an incentive for
the individual to remain with the Company. Long-term incentive compensation
consists of equity-based and cash-based programs.
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 consists of stock option grants which vest over
a multi-year period. Options for executive officers are granted in tandem with
limited stock appreciation rights, which are designed to provide the executive
with an economic benefit comparable to that available to all shareowners in the
event of a tender offer for the Company's shares, a change in control or similar
event. The Company periodically grants new awards to provide continuing
incentives for future performance, without regard to the number of outstanding
awards except that consideration is given to any recent large multi-year grants.
Depending on the executive, grants are either made annually, with vesting over a
three-year period, or periodically, with vesting over a longer period and in
some cases subject to acceleration if specified financial performance objectives
are achieved. Like the annual bonus, award levels are set with regard to
competitive considerations, and each individual's actual award is based upon the
individual's performance, potential for advancement, leadership ability and
commitment to the Company's strategic efforts. In addition to stock options,
awards of restricted units, each of which entitles the holder to one share of
Common Stock on vesting (or cash in the Committee's discretion), may be made on
a select basis to individual executives in order to enhance the incentive for
them to remain with the Company. These units vest over an extended period of up
to ten years.
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<PAGE>
In addition to the equity-based program, the Company in 1998 implemented a
cash-based long-term incentive program for its strategic business unit leaders.
The purpose of this program is to motivate achievement of key long-term
financial objectives and to provide competitive total compensation.
Participating executives are given the opportunity to earn cash compensation if
certain cumulative revenue growth and net income targets are met by the end of
2000. None of the executive officers named in the Summary Compensation Table
received this incentive.
The Company intends, to the extent practicable, to preserve deductibility
under the Internal Revenue Code of compensation paid to its executive officers
while maintaining compensation programs to attract and retain highly qualified
executives in a competitive environment. Accordingly, compensation paid under
the Company's stock plan and incentive compensation plan is generally
deductible, although certain compensation paid to some executives may not be
deductible.
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.
In conducting these annual reviews, the Committee considers information provided
by the Chief Executive Officer and the Senior Vice President-Human Resources and
Communications and uses annual surveys, periodic reports, and advice and
consultation on pay levels provided by independent compensation consultants. The
Committee also periodically reviews the levels of ownership in shares and
share-equivalents of the Common Stock for executive officers to assure that they
maintain ownership positions that are consistent with guidelines established at
other large industrial companies.
The Committee annually reviews with the Chief Executive Officer the
individual performance 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 and amount of long-term awards for
officers. The Committee also reviews with the Chief Executive Officer the
financial and other objectives for the executive officers for the following
year.
In 1998, awards to executive officers as a group reflected the overall
financial performance of the Company, which included achievement of the
Company's sales, earnings per share and cash flow goals. Awards to individuals
also reflected performance against their specific management objectives, as well
as the performance of the operations or functions for which they were
responsible.
Chief Executive Officer
Under Mr. Bossidy's employment agreement, he is entitled to an annual
salary of $2,000,000, which has remained unchanged since 1994. Based on the
Company's financial performance in 1998, which included a 15% increase in
earnings per share, a 38% increase in free cash flow and a 14% increase in net
income, as well as a 14% increase in the price of the Common Stock, the results
of the Company's Six Sigma program, and the Company's continued
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<PAGE>
focus on customer excellence, the Committee awarded Mr. Bossidy a bonus of
$4,000,000. In light of the grant of options made to Mr. Bossidy in 1997, no
further grants were made to him in 1998.
Members of the Management Development and Compensation Committee:
Robert P. Luciano, Chairman
Hans W. Becherer
Ivan G. Seidenberg
Andrew C. Sigler
John R. Stafford
* * *
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
------------------------------------ -------------------------
Securities
Name and 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. 1998 $2,000,000 $4,000,000 $ 10,955 -- -- $ 440,164
Bossidy 1997 2,000,000 3,150,000 4,617 -- 1,500,000 572,352
Chairman of the 1996 2,000,000 2,800,000 6,576 -- -- 1,028,889
Board and Chief
Executive Officer
Frederic M. 1998 600,000 1,000,000 21,475 -- 100,000 185,473
Poses 1997 510,000 735,000 13,572 -- -- 112,710
President and 1996 493,500 670,000 15,767 -- -- 101,901
Chief Operating
Officer
Peter M. 1998 445,000 550,000 14,135 -- -- 91,570
Kreindler 1997 410,000 480,000 7,996 -- -- 46,305
Senior Vice 1996 410,000 430,000 4,835 -- 780,000 45,315
President, General
Counsel and
Secretary
Richard F. 1998 410,000 500,000 12,929 -- -- 66,207
Wallman 1997 377,917 420,000 7,568 -- -- 36,561
Senior Vice 1996 358,333 350,000 7,616 $ 1,231,250 715,000 24,213
President and Chief
Financial Officer
Donald J. 1998 375,000 450,000 6,925 -- -- 62,071
Redlinger 1997 356,250 400,000 1,606 -- -- 54,116
Senior Vice 1996 350,000 350,000 1,239 -- 650,000 44,477
President-Human
Resources and
Communications
(footnotes on next page)
</TABLE>
15
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<PAGE>
- ------------
(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. The
Committee has the discretion to pay all or part of such awards in cash. None
of the units reflected in the table vests in less than three years. The
total number of units held and their value at the end of 1998 were as
follows: Mr. Bossidy, 595,796 units ($26,401,210); Mr. Poses, 60,000 units
($2,658,750); Mr. Kreindler, 40,000 units ($1,772,500); Mr. Wallman, 50,000
units ($2,215,625); and Mr. Redlinger, 50,000 units ($2,215,625). Common
Stock dividend equivalents are payable on each unit.
(2) Amounts shown for 1998 consist of matching contributions made by the Company
under the savings plan and supplemental savings plan: for Mr. Bossidy,
$159,743; Mr. Poses, $48,267; Mr. Kreindler, $35,604; Mr. Wallman, $16,538;
and Mr. Redlinger, $30,000; the value of life insurance premiums: for Mr.
Bossidy, $175,247; Mr. Poses, $20,770; Mr. Kreindler, $23,462; and Mr.
Redlinger, $21,702; and above-market interest earned during 1998 on
previously deferred compensation but not paid or payable in 1998: for Mr.
Bossidy, $105,174; Mr. Poses, $116,436; Mr. Kreindler, $32,504; Mr. Wallman,
$49,669; and Mr. Redlinger, $10,369.
------------------------
OPTION TABLES
The following tables contain information concerning stock options, all of
which were granted with an exercise price equal to 100% of the fair market value
of the Common Stock on the date of grant.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of % of Total
Securities Options Grant
Underlying Granted to Exercise Date
Options Employees in Price Expiration Present
Name Granted Fiscal Year ($/Sh) Date Value(1)
- ------------------------------------ --------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Lawrence A. Bossidy................. -- -- -- -- --
Frederic M. Poses(2)................ 100,000 2% $ 36.47 1/22/08 $881,000
Peter M. Kreindler.................. -- -- -- -- --
Richard F. Wallman.................. -- -- -- -- --
Donald J. Redlinger................. -- -- -- -- --
</TABLE>
- ------------
(1) Options are valued using a Black-Scholes option pricing model which assumes
a historic five-year average volatility of 20.0%, the average dividend yield
for the three years ended
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<PAGE>
December 31, 1997 (1.6%), a 5.5% risk-free rate of return (based on the
average zero coupon five-year U.S. Treasury note yield for the month of
grant), and an expected option life of five years based on past experience.
No adjustments are made for non-transferability or risk of forfeiture.
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 grant date present values are realized, total shareowner value will
have appreciated by approximately $5.0 billion, and the value of the granted
options reflected in the table will be less than 0.02% of the total
shareowner appreciation.
(2) These options are exercisable in cumulative installments of 40% commencing
on January 1, 1999 and 30% on each of January 1, 2000 and 2001. The options
are accompanied by tandem limited stock appreciation rights, which provide
that in the event of a tender offer for the Company's shares, a change in
control or similar event, a cash payment will be made within 90 days equal
to the difference between the option exercise price and a price for the
Common Stock related to the event, and the corresponding options will
expire.
------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options(1)
Shares Options at Year-End at Year End
Acquired on Value -------------------------- --------------------------
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence A. Bossidy.......... 300,000 $8,149,200 3,540,000 1,500,000 $94,699,650 $ 13,308,750
Frederic M. Poses............ 100,000 2,682,000 655,000 1,100,000 17,060,788 27,306,750
Peter M. Kreindler........... 80,000 2,044,110 222,000 660,000 4,822,215 12,535,050
Richard F. Wallman........... -- -- 159,000 605,000 3,330,958 11,490,463
Donald J. Redlinger.......... 45,000 1,234,400 377,000 550,000 9,127,853 10,445,875
</TABLE>
- ------------
(1) 'In-the-Money Options' are those which have an exercise price that is lower
than the year-end fair market value of the underlying securities.
17
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<PAGE>
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>
<CAPTION> 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
Company Common Stock 87.7 124.8 178.7 209.8 243.0
S&P 500 101.3 139.4 171.4 228.6 293.9
Composite Group 107.5 153.1 199.0 232.9 209.0
</TABLE>
In each case, a $100 investment on December 31, 1993 and reinvestment of
all dividends are assumed. Returns are at December 31 of each year.
------------------------
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.
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<PAGE>
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>
Average Years of Service
Annual ------------------------------------------------------------------
Remuneration 5 10 15 20 25 - 30
- ------------ -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 600,000 $ 49,693 $109,693 $ 169,693 $ 229,693 $ 289,693
800,000 69,693 149,693 229,693 309,693 389,693
1,000,000 89,693 189,693 289,693 389,693 489,693
2,000,000 189,693 389,693 589,693 789,693 989,693
3,000,000 289,693 589,693 889,693 1,189,693 1,489,693
4,000,000 389,693 789,693 1,189,693 1,589,693 1,989,693
5,000,000 489,693 989,693 1,489,693 1,989,693 2,489,693
</TABLE>
The benefit amounts shown in the Pension Table are computed on a straight
life annuity basis. At January 1, 1999, the following individuals had the
indicated number of years of credited service for pension purposes: Mr. Bossidy,
7.5; Mr. Poses, 29.28; Mr. Kreindler, 7.0; Mr. Wallman, 2.81; and Mr.
Redlinger, 27.62.
The amounts in the Salary and Bonus columns of the Summary Compensation
Table for 1998 would be included in computing remuneration for pension purposes.
Average annual remuneration under the Pension Plan is calculated based on the
highest paid 60 consecutive months of an employee's last 120 months of
employment.
Under his employment agreement, commencing on retirement, Mr. Bossidy is
entitled to receive during his lifetime Company facilities and services
comparable to those provided prior to his retirement, and a retirement benefit
equivalent to 60% of his final average compensation (based on his highest three
years of salary and bonus) payable annually for his lifetime, and 45% 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 45% of his final average compensation will be paid to his surviving spouse
for her lifetime. Benefits under the agreement will be reduced 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's employment agreement with the Company provides for his
employment as Chairman and Chief Executive Officer through April 1, 2000 at a
salary of $2,000,000 per year, and a target annual incentive bonus of at least
80% of salary. Mr. Bossidy also has agreed to be available as an advisor to and
representative of the Company following retirement, as mutually
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<PAGE>
agreed to by him and his successor. His employment agreement also provides for
certain post-retirement benefits which are described under 'Retirement
Benefits.' The Company has assumed obligations for certain life insurance
policies and 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 executive
officers 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 time if their employment is terminated other than for 'gross cause'
(which includes fraud and criminal conduct). The period would range from 18
months for any named officer hired after June 30, 1993 to 36 months for those
named officers employed on that date (but in no event beyond age 65), provided
that payments would be made in a lump sum following a change in control. 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.
2 -- APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee, which is composed entirely
of independent directors, the Board of Directors has appointed
PricewaterhouseCoopers LLP ('PwC') as independent accountants for the Company to
audit its consolidated financial statements for 1999 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 Exchange Commission and consultation in connection with
various accounting and financial reporting matters. PwC also performs non-audit
services for the Company.
The Board has directed that the appointment of PwC 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.
Total fees for services rendered by PwC in 1998 to the Company and its
subsidiaries worldwide were approximately $18,500,000. The Company has been
advised by PwC that it will have a representative present at the Annual Meeting
who will be available to respond to appropriate questions. The 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 PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS.
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SHAREOWNER PROPOSALS
Shareowners have given the Company 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 and the Company is not responsible for any
inaccuracies contained therein. 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.
3 -- SHAREOWNER PROPOSAL REGARDING
CEO COMPENSATION
This proposal has been submitted by the Eleanora L. Halfman Trust, c/o
Franklin Research & Development Corporation, 711 Atlantic Avenue, Boston,
Massachusetts 02111 (the owner of 700 shares of Common Stock).
------------------------
'WHEREAS, increases in CEO compensation continue to dwarf the compensation
increases enjoyed by employees. Between 1990 and 1997, CEO cash
compensation rose 82% and average total compensation (including stock
options) rose 298% to $7.8 million, vastly exceeding a 22% increase in
factory wages and S&P earnings growth of 110% (Business Week Survey of
Executive Compensation; Bureau of Labor Statistics);
'WHEREAS, though U.S. multinational corporations increasingly see
themselves as global companies, taking advantage of global labor markets,
they continue to pay their executives at levels far surpassing levels
common in Europe and Asia;
'WHEREAS, considering executive pay in the global context, U.S. CEOs make
on average 1,871 times the average wage of Mexican maquiladora workers
($4,168 a year) and 15,600 times the minimum wage of workers in Vietnam
($500 a year);
'WHEREAS, AlliedSignal's CEO in 1997 was the 16th highest paid U.S. CEO
making $28.2 million or 3.6 times the pay of the average U.S. CEO; 1,000
times the average U.S. factory worker, and 6,765 times the average wage for
Mexican maquiladora workers, a nation where AlliedSignal continues to
expand;
'WHEREAS, AlliedSignal's efforts to cut costs have been disproportionately
focused on the factory floor, while ignoring the executive suite and the
board room, further exacerbating the wage gap between corporate leaders and
average employees. Between 1995 and 1997, a period when our company laid
off more than 11,000 workers (moving many of these jobs to Mexico and other
low-wage regions), the top six officers enjoyed increases in salary and
bonus of more than 20%, while the Board in 1997 voted itself an annual cash
raise exceeding 42%;
'WHEREAS, growing research on effective organizations stresses the
importance of empowering front-line workers, a goal undermined by
compensation policies that reward top executives at the expense of workers
closest to the customers and production;
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'WHEREAS, business leaders and thinkers ranging from J.P. Morgan to Peter
Drucker have argued against wide pay gaps within enterprises and called for
limits on executive pay based on multiples of worker compensation;
'THEREFORE, BE IT RESOLVED, that shareholders urge the Board of Directors
to address the issue of runaway remuneration of CEOs and the widening gap
between highest and lowest paid workers by:
1) Establishing a cap on CEO compensation expressed as a multiple of pay of
the lowest paid worker at AlliedSignal;
2) Preparing a report for shareholders explaining the determinations used
in order to determine the appropriate cap.'
'SUPPORTING STATEMENT: In asking AlliedSignal to establish a cap on
executive compensation, we have not sought to impose our own arbitrary cap
on executive pay. Instead we have asked our company to wrestle with the
issue of the rising wage-gap that exists between corporate executives and
those they seek to lead. By imposing the financial discipline of a pay cap,
we hope our company can help reverse a long standing trend that is neither
good for business, nor society. Please vote YES.'
BOARD OF DIRECTORS' RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The determination of the appropriate level of compensation for the
Company's Chief Executive Officer is a key responsibility of the Board of
Directors and its Management Development and Compensation Committee. As
discussed in the 'Report of the Management Development and Compensation
Committee' above, the directors consider a number of factors in establishing Mr.
Bossidy's compensation. Based on the value that his leadership, vision and
dedication has provided to the Company and its shareowners since he joined the
Company, including an increase in the market value of the Company's shares from
$3.6 billion to $24.8 billion, the independent directors believe that his
overall compensation level is appropriate.
To compete in an increasingly complex global marketplace, the Company must
attract and retain the best leadership talent. The Board believes that a cap,
whether internally or externally imposed, would limit its ability to search for
the skills and talent necessary to continue the Company's preeminent business
results. Therefore, the Board believes it would not be in the best interest of
the shareowners to establish an arbitrary cap on the compensation paid to the
Chief Executive Officer. Doing so could unduly inhibit the Company's flexibility
in providing compensation arrangements needed to reward and retain a current
Chief Executive Officer in a competitive environment or to attract and motivate
other Chief Executive Officers in the future.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
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4 -- SHAREOWNER PROPOSAL REGARDING
THE ANNUAL ELECTION OF DIRECTORS
This proposal has been submitted by Mr. John Chevedden, 2215 Nelson Avenue,
No. 205, Redondo Beach, California 90278 (the owner of 884 shares of Common
Stock).
------------------------
'The shareholders of AlliedSignal request the Board of Directors take
the necessary steps to amend the company's governing instruments, including
the corporate by-laws, to elect the entire Board of Directors each year.
This includes the requirement that any future change in the frequency of
election of directors be submitted to shareholder vote as a stand-alone
issue.
'The Business Week Nov. 25, 1996 Cover Story said for the `The Best
Boards: PLACE THE ENTIRE BOARD UP FOR ELECTION EVERY YEAR.'
'It is intuitive to many institutional shareholders that, when
directors are accountable through annual election, they perform better. The
current piecemeal election insulates directors and senior management from
the impact of poor performance.
'Allied directors are also super-protected by a 80% vote requirement
to remove directors. A majority (of shareholder votes cast) voted to end
this 80% super-majority as a separate resolution at the 1998 Allied
shareholder meeting.
'DID ALLIED DIRECTORS PURSUE A FAILED, HOSTILE AND CONSUMING TAKEOVER
OF AMP? Did directors divert their valuable attention from Allied's core
business?
'Allied was in the same connector business as AMP with the Amphenol
brand. Allied quit the business because Allied failed to improve low
profits.
'Director oversight is in question due to the heavy outside
commitments of Allied directors:
<TABLE>
<S> <C>
R.E. Palmer, full-time CEO Sits on 6 outside boards
Seidenberg, full-time CEO Sits on 4 outside boards
T. Stafford, consultant Sits on 7 outside boards
</TABLE>
'Meanwhile, mergers often don't work, like Boeing:
Boeing stock falls 45% after merger.
ValueLine Oct. 2, 1998
Boeing's net-return-on-productive-assets plunged 50%.
Aviation Week Aug. 10, 1998
'Institutional Shareholder Services, a proxy advisory firm that
studies shareholder resolutions, recommended a yes vote for this resolution
in 1998. Allied is 69% owned by institutional shareholders.
23
<PAGE>
<PAGE>
'If the AMP merger does not work, it could be 3 years before
shareholders can express their vote to all Allied directors. Allied
directors also sit on interlocking outside boards as cross-directors:
<TABLE>
<CAPTION>
Company Interlocking Allied Directors from 1998 proxy
- --------------------------------- ---------------------------------------------------------------
<S> <C>
Bell Atlantic Seidenberg, J. Stafford
American Home Products Seidenberg and J. Stafford again
Chase Manhattan Sigler, J. Stafford
Deere Becherer, J. Stafford (J. Stafford's 4th interlock)
Schering-Plough Becherer, Luciano
</TABLE>
Corporate governance experts say cross-directors tend to look out for
each other, rather than shareholders.
Business Week March 9, 1998
'To encourage all Allied's directors (with heavy outside commitments)
to answer each year for a consuming hostile take-over battle and attend to
the core business, vote for:
ANNUAL ELECTION OF THE ENTIRE BOARD
YES ON 4'
BOARD OF DIRECTORS' RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Company's current system of electing directors by classes was approved
by the shareowners in 1985. Under this method, as provided in the Company's
Certificate of Incorporation and By-laws, approximately one-third of the
directors are elected annually by the shareowners.
The same proponent has presented a proposal to eliminate the classified
Board in each of the last three years. The Board of Directors has again reviewed
the issues raised in the proposal and, for the reasons indicated below, it
continues to believe that the classified Board serves the Company and its
shareowners well.
With the classified Board, the likelihood of continuity and stability in
the Board's business strategies and policies is enhanced since generally
two-thirds of the directors at all times will have had prior experience and
familiarity with the business and affairs of the Company. This enables the
directors to build on past experience and plan for a reasonable period into the
future.
The classified Board is intended to encourage persons who may seek to
acquire control of the Company to initiate such action through negotiations with
the Board. Otherwise, at least two meetings of shareowners would generally be
required to replace a majority of the Board. By reducing the threat of an abrupt
change in the composition of the entire Board, classification of directors would
provide the Board with an adequate opportunity to fulfill its duties to the
Company's shareowners to review any takeover proposal, study appropriate
alternatives and achieve the best results for all shareowners. The Board
believes that a classified Board enhances
24
<PAGE>
<PAGE>
the ability to negotiate favorable terms with a proponent of an unfriendly or
unsolicited proposal, but that it does not preclude takeover offers.
The Board believes that directors elected to a classified Board are no less
accountable to shareowners than they would be if all directors were elected
annually. Since at least four directors must stand for election each year, the
shareowners have the opportunity annually to vote against those directors as a
way of expressing any dissatisfaction they may have with the Board or
management. The Board addresses many important issues during the year and it
disagrees with any suggestion by the proponent that its attention to these
issues is in any way affected by the timing of elections.
The Board also disagrees with the proponent's suggestion that its oversight
is in question because of directors' service on outside boards; on the contrary,
such service can be beneficial to the Company since it provides perspective and
experience that enhances a director's contributions to the Board's
deliberations. Further, the Board disputes the inference that service by certain
of the Company's directors on common outside boards negatively impacts their
ability to act in the best interest of the Company's shareowners.
Adoption of this proposal would not automatically eliminate the classified
Board. Further action by the shareowners would be required to amend the By-laws
and the Certificate of Incorporation. Under these documents, an 80% vote of the
outstanding shares would be required for approval. Under Delaware law, an
amendment to the Certificate of Incorporation requires a recommendation from the
Board of Directors prior to submission to shareowners. While the Board would
consider such an amendment, it would do so consistent with its fiduciary duty to
act in a manner it believes to be in the best interest of the Company and its
shareowners.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
ADDITIONAL INFORMATION
OTHER ACTION AT THE MEETING
The Company did not receive timely notice under Rule 14a-4(c)(1) of the
proxy rules adopted by the Securities and Exchange Commission (the 'Commission')
under the Securities Exchange Act of 1934 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 or any shares
voted by telephone will be voted in the discretion of the Company's proxies
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
25
<PAGE>
<PAGE>
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.
SHAREOWNER PROPOSALS FOR 2000 ANNUAL MEETING
Shareowners may submit proposals on matters appropriate for shareowner
action at the Company's annual meetings, consistent with regulations adopted by
the Commission. Proposals submitted for inclusion in the Company's Proxy
Statement and form of proxy for the 2000 Annual Meeting of Shareowners are
subject to the requirements of Rule 14a-8 of the proxy rules adopted by the
Commission, and must be received by the Company not later than November 9, 1999.
If a shareowner intends to present a proposal for consideration at the 2000
Annual Meeting outside the processes of Rule 14a-8, the Company must receive
notice of such proposal on or before January 24, 2000, or such notice will be
considered untimely under Rule 14a-4(c)(1) of the Commission's proxy rules, and
the Company's proxies will have discretionary voting authority with respect to
such proposal, if presented at the meeting, without including information
regarding such proposal in its proxy materials. Proposals should be directed to
the attention of the Secretary, AlliedSignal Inc., P.O. Box 4000, Morristown,
New Jersey 07962.
COST OF SOLICITATION
The cost of solicitation will be paid 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 brokers, banks and other intermediaries holding
stock in their names or those of their nominees for their reasonable expenses in
sending proxy material to the beneficial owners of the stock 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.
------------------------
Shareowners are urged to send in their proxy cards or vote by telephone
without delay.
By Order of the Board of Directors
PETER M. KREINDLER
Senior Vice President,
General Counsel and Secretary
March 9, 1999
26
<PAGE>
<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 (Springfield -- Morristown). Follow Rte. 24
West to Exit 2A (Rte. 510 West -- Morristown), which exits onto Columbia Road.
At second traffic light, make left into AlliedSignal.
A-1
<PAGE>
<PAGE>
[LOGO]
NOTICE OF 1999 ANNUAL MEETING
AND PROXY STATEMENT
<PAGE>
<PAGE>
APPENDIX 1
PROXY CARD
AlliedSignal Inc.
Annual Meeting of Shareowners
101 Columbia Road
Morris Township, New Jersey
April 26, 1999
10:00 A.M.
You May Vote by
Telephone or by Mail
(see instructions on reverse side)
Your Vote is Important
Detach proxy card here if you are not voting by telephone.
- ------------------------------------------------------------------------------
[LOGO] P R O X Y
This Proxy is Solicited on Behalf of the Board of Directors of AlliedSignal Inc.
Annual Meeting of Shareowners--April 26, 1999
The undersigned hereby appoints LAWRENCE A. BOSSIDY and PETER M. KREINDLER
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 26,
1999, 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: Hans W. Becherer, Marshall N. Carter, Robert P.
Luciano, Robert B. Palmer and John R. Stafford.
<TABLE>
<S> <C>
NOTE: After signing, please insert ALLIEDSIGNAL INC.
this Proxy in the enclosed envelope P.O. BOX 11010
so that the address at right shows NEW YORK, N.Y. 10203-0010
through the window.
</TABLE>
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" PROPOSAL 2 AND
"AGAINST" PROPOSALS 3 and 4.
(SPECIFY CHOICES AND SIGN ON THE REVERSE SIDE)
<PAGE>
<PAGE>
[LOGO]
VOTE BY TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
<TABLE>
<CAPTION>
TELEPHONE MAIL
800-574-7048
<S> <C>
Use any touch-tone telephone to vote your To vote your shares by mail, mark, sign
shares, toll-free. Have your proxy card in and date your proxy card and return it in
hand when you call. You will be prompted the enclosed postage-paid envelope.
to enter your "Control Number", located in
the box below, and then follow the recorded
instructions.
Your telephone vote authorizes the If you have voted by telephone,
proxies named on the proxy card to please do not mail back your proxy
vote your shares in the same manner card. Telephone voting will not be
as if you marked, signed and returned available after 5:00 P.M. (E.D.T.) on
the proxy card. April 23, 1999.
Call Toll-Free To Vote It's Fast And Convenient
800-574-7048 CONTROL NUMBER FOR
TELEPHONE VOTING
</TABLE>
Detach proxy card here if you are not voting by telephone.
- ------------------------------------------------------------------------------
Please complete (X) in blue or black ink.
- ------------------------------------------------------------------------------
A vote "FOR" Proposals 1 and 2 is recommended by the Board of Directors:
- ------------------------------------------------------------------------------
1. Election of Directors (H.W. Becherer, M.N. Carter, R.P. Luciano, R.B.
Palmer and J.R. Stafford)
<TABLE>
<S> <C> <C>
FOR all WITHHOLD AUTHORITY EXCEPTION
nominees [X] to vote for all nominees [X] (see Instruction) [X]
</TABLE>
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. Appointment of Independent Accountants
FOR [X] AGAINST [X] ABSTAIN [X]
- -----------------------------------------------------------------------------
A vote "AGAINST" Proposals 3 and 4 is recommended by the Board of Directors:
- -----------------------------------------------------------------------------
3. Shareowner proposal regarding CEO compensation
FOR [X] AGAINST [X] ABSTAIN [X]
4. Shareowner proposal regarding the annual election of directors
FOR [X] AGAINST [X] ABSTAIN [X]
Please complete (X) if you:
Plan to attend the Have written comments
Annual Meeting [X] on this card [X]
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 _____________________ , 1999
Signed ____________________________
____________________________________
Please sign, date and return this Proxy
promptly in the enclosed envelope.
Please complete (X) if you want your vote kept confidential under
the policy described on page 1 of the Proxy Statement. [X]
- ------------------------------------------------------------------------------
Please Detach Here
Detach this portion of the proxy card
before returning it.
- ------------------------------------------------------------------------------
<PAGE>
<PAGE>
APPENDIX 2
SAVINGS PLAN INSTRUCTION CARD
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 26, 1999, 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: Hans W. Becherer, Marshall N. Carter, Robert P.
Luciano, Robert B. Palmer and John R. Stafford.
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' PROPOSAL 2 AND 'AGAINST' PROPOSALS
3 AND 4. 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>
<PAGE>
A VOTE 'FOR' PROPOSALS 1 AND 2 IS RECOMMENDED BY THE BOARD OF DIRECTORS:
1. Election of Directors
(H.W. Becherer, M.N. Carter, R.P Luciano, R.B. Palmer and J.R. Stafford)
FOR all nominees [ ] WITHHOLD AUTHORITY [ ]
(except as noted below) 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. Appointment of Independent Accountants
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
A VOTE 'AGAINST' PROPOSALS 3 AND 4 IS RECOMMENDED BY THE BOARD OF DIRECTORS:
3. Shareowner proposal regarding CEO compensation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Shareowner proposal regarding the annual election of directors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS.
Dated ___________________________, 1999
Signed ___________________________
<PAGE>
<PAGE>
APPENDIX 3
THRIFT PLAN INSTRUCTION CARD
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 26, 1999, 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: Hans W. Becherer, Marshall N. Carter, Robert P.
Luciano, Robert B. Palmer and John R. Stafford.
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' PROPOSAL 2 AND 'AGAINST' PROPOSALS
3 AND 4. 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>
<PAGE>
A VOTE 'FOR' PROPOSALS 1 AND 2 IS RECOMMENDED BY THE BOARD OF DIRECTORS:
1. Election of Directors
(H.W. Becherer, M.N. Carter, R.P Luciano, R.B. Palmer and J.R. Stafford)
FOR all nominees [ ] WITHHOLD AUTHORITY [ ]
(except as noted below) 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. Appointment of Independent Accountants
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
A VOTE 'AGAINST' PROPOSALS 3 AND 4 IS RECOMMENDED BY THE BOARD OF DIRECTORS:
3. Shareowner proposal regarding CEO compensation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Shareowner proposal regarding the annual election of directors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS.
Dated ___________________________, 1999
Signed ___________________________
<PAGE>
<PAGE>
APPENDIX 4
TRUCK BRAKE SYSTEMS INSTRUCTION CARD
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 26, 1999, 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: Hans W. Becherer, Marshall N. Carter, Robert P.
Luciano, Robert B. Palmer and John R. Stafford.
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' PROPOSAL 2 AND 'AGAINST' PROPOSALS
3 AND 4. 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>
<PAGE>
A VOTE 'FOR' PROPOSALS 1 AND 2 IS RECOMMENDED BY THE BOARD OF DIRECTORS:
1. Election of Directors
(H.W. Becherer, M.N. Carter, R.P Luciano, R.B. Palmer and J.R. Stafford)
FOR all nominees [ ] WITHHOLD AUTHORITY [ ]
(except as noted below) 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. Appointment of Independent Accountants
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
A VOTE 'AGAINST' PROPOSALS 3 AND 4 IS RECOMMENDED BY THE BOARD OF DIRECTORS:
3. Shareowner proposal regarding CEO compensation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Shareowner proposal regarding the annual election of directors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS.
Dated ___________________________, 1999
Signed ___________________________
<PAGE>
<PAGE>
APPENDIX 5
LETTER TO PLAN PARTICIPANTS
[LOGO] AlliedSignal Inc.
P.O. Box 3000
Morristown, NJ 07962-2496
LARRY BOSSIDY
Chairman and
Chief Executive Officer
March 9, 1999
Dear Plan Participant:
Thanks to the continued dedication and commitment of AlliedSignal's employees,
the company in 1998 achieved a 15% increase in earnings per share to a record
$2.32, representing the seventh consecutive year of earnings growth of 15% or
more. We also had record sales of more than $15 billion. Total return to
shareowners, including share price appreciation and reinvested dividends, was
16% in 1998. Since the beginning of 1991, AlliedSignal's market value has grown
at a compounded average annual rate of 27%.
We are delighted that participants in our savings programs have shared the
rewards of the company's growth, at the same time that employees' ratings of the
company in the Employee Satisfaction Survey have continued to improve. We can
all be proud that Fortune once again ranked AlliedSignal as one of the 100 Best
Companies To Work For (based in part on Fortune's own surveys of employees) and
also ranked us the world's most admired aerospace company. In addition, Forbes
ranked AlliedSignal the world's best diversified company. We are confident that
AlliedSignal can continue to experience substantial growth well into the future,
as well as continued progress in satisfying employees.
I am enclosing with this letter a meeting notice and proxy statement for the
1999 Annual Meeting of Shareowners. As a plan participant, 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 card requesting your confidential voting instructions 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 instruction card at your earliest convenience.
If you own AlliedSignal shares other than through the savings programs, you will
receive separate voting instructions for those shares. To vote all of your
shares, you should return your enclosed plan instruction card to the Trustee in
the enclosed envelope, and follow the instructions provided to you relating to
any other shares you may own.
I appreciate your continued support as we progress toward our vision of becoming
one of the world's premier companies in the new millennium.
Sincerely,
Larry Bossidy
Enclosures
<PAGE>
