Summary
Honeywell International Inc. (HON) filed an 8-K on February 7, 2005, detailing actions taken by its Management Development and Compensation Committee on February 2, 2005, regarding executive compensation for 2005. The committee approved the 2005 financial objectives and their weightings for determining incentive compensation. Key performance metrics for the incentive compensation pool and individual awards include Earnings Per Share (EPS) and free cash flow, with equal weighting for both at the corporate level. The plan also incorporates relative EPS growth performance against a peer group of 36 S&P 500 companies. Further, the report outlines the structure for a long-term, cash-based compensation program (Growth Plan) for the 2005-2006 performance cycle, which will be based on equal weightings of revenue growth and return on investment, with a minimum annual EPS growth threshold required for payout. The filing also discloses stock option grants and Growth Plan Unit awards to executive officers, aligning executive incentives with company performance and shareholder value creation.
Key Highlights
- 12005 financial objectives and weightings for executive incentive compensation have been approved.
- 2Key performance metrics for 2005 incentive compensation include Earnings Per Share (EPS) and free cash flow, with equal weighting.
- 3Executive incentive compensation pool will be adjusted based on Honeywell's relative EPS growth compared to 36 peer companies.
- 4Executive bonus targets range from 65% to 125% of base salary, with potential awards from 0% to 200% of target.
- 5Long-term Growth Plan (2005-2006) will be based on equally weighted revenue growth and return on investment, requiring a minimum EPS growth threshold.
- 6Stock options have been granted to executive officers, with specific amounts disclosed for each.
- 7Growth Plan Units for the 2005-2006 performance cycle were also awarded to executive officers, equal to 10% of their stock options.