Summary
Honeywell International Inc. (HON) filed an 8-K on February 22, 2007, detailing executive compensation plans for 2007 and the 2007-2008 performance cycle. The company's Management Development and Compensation Committee approved the financial metrics and weightings for both annual incentive compensation and the long-term Growth Plan. The annual incentive plan focuses on Earnings Per Share (EPS), Free Cash Flow (FCF), and Working Capital Turns (WCT), with EPS having the largest weighting. Performance against these metrics, along with peer group EPS growth and other qualitative objectives, will determine executive bonuses. The Growth Plan, a long-term cash-based program, will be measured by organic revenue growth and Return on Investment (ROI) improvement over a two-year period.
Key Highlights
- 1Honeywell's 2007 annual incentive compensation plan will be primarily driven by Earnings Per Share (EPS), Free Cash Flow (FCF), and Working Capital Turns (WCT), with weightings of 50%, 25%, and 25% respectively.
- 2The EPS component of the annual incentive bonus pool is subject to adjustments (up to 25%) based on Honeywell's relative EPS growth performance compared to 34 peer companies.
- 3Executive bonus targets generally range from 75% to 125% of base salary, with actual awards potentially ranging from 0% to 200% of target, dependent on performance against financial and non-financial objectives.
- 4The 2007-2008 Growth Plan, a long-term cash-based compensation program, will use organic revenue growth (50%) and Return on Investment (ROI) improvement (50%) as performance metrics.
- 5Specific targets for the Growth Plan include $4.898 billion for organic revenue growth and 6.2 percentage points for ROI improvement.
- 6Payouts for the Growth Plan can range from 0% to 200% of the target amount, with 50% paid after the performance cycle and the remaining 50% deferred for one year to promote retention.