Summary
Honeywell International Inc. (HON) filed an 8-K on February 18, 2008, detailing the 2008 annual incentive compensation plan for its executives, approved by the Management Development and Compensation Committee on February 15, 2008. The plan outlines the key financial metrics and their weightings that will determine the incentive payouts for the upcoming year. This filing provides insight into the company's performance expectations and how executive compensation is tied to achieving specific financial targets, which is a crucial consideration for investors evaluating management alignment and strategic priorities. The primary performance metrics for 2008 are Earnings Per Share (EPS), Free Cash Flow (FCF), and Working Capital Turns (WCT), weighted at 50%, 25%, and 25% respectively. Notably, the EPS component is subject to an adjustment mechanism based on Honeywell's relative EPS growth compared to a peer group of 33 companies. This suggests a strong emphasis on both absolute financial performance and market competitiveness in executive compensation.
Key Highlights
- 1Honeywell's 2008 annual incentive compensation plan for executives has been approved.
- 2The plan's funding is based on achieving corporate financial objectives for the year 2008.
- 3Key performance metrics for executive bonuses are Earnings Per Share (EPS), Free Cash Flow (FCF), and Working Capital Turns (WCT).
- 4EPS carries the highest weighting at 50%, followed by FCF at 25% and WCT at 25%.
- 5The EPS component of the bonus pool can be adjusted by up to 25% based on Honeywell's relative EPS growth compared to a peer group.
- 6Specific target values for 2008 are set: $3.80 for EPS, $3.3 billion for FCF, and 6.4 for WCT.
- 7Bonus pools for strategic business groups (SBGs) will be determined by achieving SBG financial objectives, with SBG net income substituting for EPS.