What are the primary financial goals for Honeywell executives' 2012 annual incentive compensation?

The primary financial goals for 2012 annual incentive compensation are Earnings Per Share (EPS) with a target range of $4.25-$4.50, Free Cash Flow (FCF) of $3.45 Billion, and Working Capital Turns (WCT) of 7.1.

How are the long-term incentive awards structured under the 2012-2013 Growth Plan?

The 2012-2013 Growth Plan is a two-year performance cycle with three equally weighted objectives: Total Revenue ($79.082 billion), Average Return on Investment (ROI) (23.5%), and Segment Margin Expansion (130 basis points). Fifty percent of earned awards are paid after the performance cycle, with the remaining 50% deferred for one year and contingent on continued employment.

What new metric was added to the long-term incentive plan and why?

Segment Margin Expansion was added as a new third performance metric for the 2012-2013 Growth Plan cycle. This was done to more directly align long-term incentive compensation with the company's long-term sales and segment margin targets.

Are the executive bonuses solely based on the financial metrics listed?

No, while the financial metrics are primary drivers, the Compensation Committee also considers other factors such as the strength of corporate and operating segment performance, revenue growth, profit margins, quality of earnings, industry and economic conditions, peer group performance, and individual management objectives and leadership behaviors.

HON/HONIV 8-K: Leadership Changes

Summary

This 8-K filing from Honeywell International Inc. (HON), dated February 23, 2012, details the compensation plans for its executive employees for the 2012 annual incentive program and the 2012-2013 long-term incentive program. For the annual incentive plan, the company has set corporate financial objectives for 2012, focusing on Earnings Per Share (EPS) within a target range of $4.25-$4.50, Free Cash Flow (FCF) of $3.45 billion, and Working Capital Turns (WCT) of 7.1. These metrics, defined with specific methodologies to ensure consistency and alignment with guidance, will influence the funding of the incentive compensation pool. Furthermore, the filing outlines the metrics for the 2012-2013 long-term incentive Growth Plan, which uses a two-year performance cycle. The objectives for this plan are equally weighted across Total Revenue, Average Return on Investment (ROI), and Segment Margin Expansion. The targets for this cycle are Total Revenue of $79.082 billion, Average ROI of 23.5%, and Segment Margin Expansion of 130 basis points. The structure of the Growth Plan includes a deferred payment component for 50% of the earned award, contingent on continued employment, to encourage executive retention.

Key Highlights

1Honeywell's Management Development and Compensation Committee approved 2012 corporate financial objectives for executive annual incentive compensation.
2Key performance metrics for the 2012 annual incentive plan include EPS ($4.25-$4.50 target range), Free Cash Flow ($3.45 Billion target), and Working Capital Turns (7.1 target).
3The annual incentive plan considers additional factors beyond financial metrics, such as operating segment performance, economic conditions, and individual objectives.
4The 2012-2013 long-term incentive Growth Plan targets are set for Total Revenue ($79.082 billion), Average ROI (23.5%), and Segment Margin Expansion (130 basis points).
5Segment Margin Expansion is a new metric for the 2012-2013 Growth Plan cycle to better align long-term compensation with strategic sales and margin targets.
6The Growth Plan awards are paid out over two years: 50% after the performance cycle and the remaining 50% one year later, subject to continued employment, to promote retention.

HONEYWELL INTERNATIONAL INC 8-K Report, Executive Changes (Feb 23, 2012)

Summary

Key Highlights

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