Summary
Honeywell International Inc. (HON) filed an 8-K on February 16, 2011, detailing the 2011 corporate financial objectives approved by its Management Development and Compensation Committee. These objectives will be used to determine annual incentive compensation for executives under the Incentive Compensation Plan, payable in the first quarter of 2012. The primary financial metrics for determining the incentive pool are Earnings Per Share (EPS), Free Cash Flow (FCF), and Working Capital Turns (WCT). Key targets set for 2011 include an EPS range of $3.60 to $3.80, Free Cash Flow of $3.6 Billion, and Working Capital Turns of 7.1. The company also indicated that actual awards will consider a range of other performance factors beyond these core metrics, including segment profit, margin expansion, revenue and FCF conversion, quality of earnings, relative business performance, and leadership behaviors, providing a comprehensive approach to executive compensation tied to both financial and operational success.
Key Highlights
- 1Honeywell's Compensation Committee set 2011 corporate financial objectives to determine executive incentive compensation.
- 2The key financial metrics for the 2011 annual incentive compensation plan are Earnings Per Share (EPS), Free Cash Flow (FCF), and Working Capital Turns (WCT).
- 3The target EPS for 2011 is set between $3.60 and $3.80, on a proforma net income basis excluding pension mark-to-market adjustments.
- 4The 2011 Free Cash Flow (FCF) target is $3.6 Billion, defined as cash flow from operations less capital expenditures, excluding US pension plan contributions.
- 5The target for Working Capital Turns (WCT) in 2011 is 7.1.
- 6The determination of bonus pools and awards will also consider other factors, including segment performance, margin expansion, revenue and FCF conversion, quality of earnings, and individual management objectives.