Company Name: Honeywell International, Inc.
Public Availability Date: February 15, 2008
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 20, 2007
VIA FEDERAL EXPRESS
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Honeywell International Inc.: Omission of Shareowner Proposal Submitted by
Mr. William Steiner
Ladies and Gentlemen:
On behalf of Honeywell International Inc. (the "Company" or "Honeywell"), we
have enclosed, pursuant to Rule 14a-8(j) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), five additional copies of this letter,
along with six copies of a shareowner proposal and statement of support
submitted by Mr. William Steiner (the "Proponent") for inclusion in the
Company's proxy materials for the 2008 Annual Meeting of Shareowners. Mr.
Steiner has appointed Mr. Chevedden to be his representative for all issues
pertaining to this proposal. The proposal and supporting statement are
collectively referred to as the "Steiner Proposal."
We respectfully request that the staff of the Division of Corporation Finance
(the "Staff") confirm that it will not recommend any enforcement action to the
Securities and Exchange Commission (the "SEC") if the Company omits the Steiner
Proposal from its 2008 proxy materials. We are sending a copy of this letter to
the Proponent and Mr. Chevedden as formal notice of Honeywell's intention to
exclude the Steiner Proposal from its 2008 proxy materials.
The Steiner Proposal states:
"Resolved, Shareholders request that our Board of Directors adopt a policy or
bylaw whereby 75% of future equity compensation (stock options and restricted
stock) awarded to senior executives shall be performance-based, and the
performance criteria adopted by the Board disclosed to shareowners.
'Performance-based' equity compensation is defined here as:
(a) Indexed stock options, the exercise price of which is linked to an industry
index;
(b) Premium-priced stock options, the exercise price of which is substantially
above the market price on the grant date; or
(c) Performance-vesting options or restricted stock, which vest only when the
market price of the stock exceeds a specific target for a substantial period."
Reasons for Excluding the Steiner Proposal. It is our opinion that the Steiner
Proposal is excludable because it substantially duplicates another proposal
previously submitted to the Company by another proponent that the Company will
include in its 2008 proxy materials.
The Steiner Proposal Substantially Duplicates a Previously Submitted Proposal
Rule 14a-8(i)(11) permits the Company to exclude a proposal that is
"substantially duplicative of a proposal previously submitted to the registrant
by another proponent, which proposal will be included in the registrant's proxy
material for the meeting." The Commission's adopting release states that "[t]he
purpose of the provision is to eliminate the possibility of shareholders having
to consider two or more substantially identical proposals submitted to an issuer
by proponents acting independently of each other." Exchange Act Rel. No.
34-12999 (Nov. 22, 1976).
The Steiner Proposal was received on November 6, 2007. Prior to that date, on
November 2, 2007, the Company received the following proposal from the United
Brotherhood of Carpenters and Joiners of America (the "Carpenters Proposal"),
six copies of which are enclosed:
"Resolved: That the shareholders of Honeywell International Inc. ("Company")
request that the Board of Director's Executive Compensation Committee adopt a
pay-for-superior-performance principle by establishing an executive compensation
plan for senior executives ("Plan") that does the following:
Sets compensation targets for the Plan's annual and long-term incentive pay
components at or below the peer group median;
Delivers a majority of the Plan's target long-term compensation through
performance-vested, not simply time-vested, equity awards;
Provides the strategic rationale and relative weightings of the financial and
non-financial performance metrics or criteria used in the annual and
performance-vested long-term incentive components of the Plan;
Establishes performance targets for each Plan financial metric relative to the
performance of the Company's peer companies; and
Limits payment under the annual and performance-vested long-term incentive
components of the Plan to when the Company's performance on its selected
financial performance metrics exceeds peer group median performance."
The Carpenters Proposal and the Steiner Proposal have the same principal thrust
or focus - that compensation to senior executives should be performance-based.
Additionally, while differing somewhat in terms and scope, each proposal
specifically targets performance-based equity compensation paid to senior
executives. The Carpenters Proposal, which addresses performance-based
compensation more broadly than does the Steiner Proposal, requests in the second
bullet point that the Company deliver a majority of long-term compensation
through performance-vested "equity awards," while the Steiner Proposal, which is
narrower in scope in that it addresses only "equity compensation," requests that
"75% of future equity compensation (stock options and restricted stock)" be
performance-based.
Both Proposals put forth the view that standard time-based equity awards are not
performance-based. Moreover, the Carpenters Proposal requests that the
performance-based terms of equity awards include a requirement that they vest
only if the Company has demonstrated "superior" performance relative to that of
the Company's "peer companies," while the Steiner Proposal would appear to allow
for, but not require, that award terms include "superior" performance on such a
relative basis.
The Steiner Proposal overlaps with and is subsumed by the Carpenters Proposal
and, thus, clearly is "substantially duplicative" of the Carpenters Proposal
within the meaning of Rule 14a-8(i)(11). Therefore, since the Company will be
including the Carpenters Proposal in its 2008 proxy materials, the Steiner
Proposal is excludable under Rule 14a-8(i)(11).
Proposals need not be identical to be excludable under Rule 14a-8(i)(11). The
Staff has consistently taken the position that proposals that have the same
"principal thrust" or "principal focus" are "substantially duplicative" even
where such proposals differ as to their terms and scope. See Pacific Gas &
Electric Company (Feb. 1, 1993). This is especially true where, as here, the
earlier proposal being included is more restrictive on the company than the
later proposal being excluded.
In Siebel Systems, Inc. (Apr. 15, 2003), Siebel Systems received a proposal
requesting a policy that "a significant portion of future stock option grants to
senior executives" be performance-based. Previously, Siebel Systems had received
a proposal requesting, among other things, that the company adopt a policy that
all "stock-related compensation plans include some form of performance hurdle or
`indexing' feature (not simply time-based vesting provisions), that govern
vesting of options or lapsing of restrictions on shares granted." The Staff
concurred that the subsequent proposal was substantially duplicative and, thus,
excludable under Rule 14a-8(i)(11). See also JP Morgan Chase & Co. (Mar. 5,
2007) (subsequent proposal requesting that 50% of future equity compensation
awarded to senior executives be performance-based was excludable where
previously submitted proposal requested that a significant portion of restricted
stock and restricted stock units granted to senior executives be
performance-based); Verizon Communications Inc. (Feb. 26, 2007) (subsequent
proposal requesting that a significant portion of future stock option grants to
senior executives be performance-based was excludable where previously submitted
proposal requested that 75% of long-term incentive compensation awarded to
senior executives be performance-based); Verizon Communications Inc. (Feb. 20,
2007) (subsequent proposal requesting that 75% of future equity compensation
awarded to senior executives be performance-based was excludable where
previously submitted proposal requested that no future stock options be awarded
to anyone); Sun Microsystems, Inc. (July 29, 2005) (subsequent proposal
requesting that 50% of future equity compensation granted to senior executives
be performance-based was excludable where previously submitted proposal
requested that a significant portion of future stock option grants to senior
executives be performance-based); The Home Depot (Feb. 28, 2005) (subsequent
proposal requesting that a significant portion of restricted stock and deferred
stock units granted to senior executives require achievement of performance
goals prior to vesting was excludable where previously submitted proposal
requested that the company adopt a performance and time-based restricted share
grant program for senior executives); and Abbott Laboratories (Feb. 4, 2004)
(subsequent proposal requesting implementation of a Commonsense Executive
Compensation program, which pertained to imposing limits on salary, bonus,
long-term equity compensation, and severance of senior executives, was
excludable where previously submitted proposal requested a policy prohibiting
stock option grants to senior executives).
Given that the Carpenters Proposal and the Steiner Proposal clearly have the
same "principal thrust" or "principal focus," the later Steiner Proposal is
substantially duplicative and, thus, excludable under Rule 14a-8(i)(11). For the
foregoing reasons, and consistent with the no-action letters identified above,
Honeywell requests that the Staff confirm that it may omit the Steiner Proposal
from its 2008 proxy materials.
* * *
We would very much appreciate a response from the Staff on this no-action
request as soon as practicable so that the Company can meet its printing and
mailing schedule for the 2008 Annual Meeting of Shareowners. If you have any
questions or require additional information concerning this matter, please call
me at 973.455.5208. Thank you.
Very truly yours,
/s/
Thomas F. Larkins Vice President, Corporate Secretary, and Deputy General
Counsel
Enclosures
cc: Mr. William Steiner Mr. John Chevedden
[INQUIRY LETTER]
January 9, 2008
VIA FEDERAL EXPRESS
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Honeywell International Inc.: Supplemental Submission Regarding a Shareowner
Proposal Submitted by Mr. William Steiner
Ladies and Gentlemen:
On behalf of Honeywell International Inc. (the "Company" or "Honeywell"), we are
submitting five copies of this letter to supplement the no-action request that
we submitted on behalf of the Company on December 20, 2007, regarding the
shareowner proposal and statement of support (the "Steiner Proposal") submitted
to the Company by Mr. William Steiner (the "Proponent"). The purpose of this
supplemental submission is to reply to the letter submitted to the Staff by Mr.
John Chevedden, dated December 24, 2007, responding to the Company's no-action
request. The Company received Mr. Chevedden's response on December 25, 2007.
In his response, Mr. Chevedden claims that the Company failed to submit evidence
of the date or time that the Company received the United Brotherhood of
Carpenters and Joiners of America (the "Carpenters") proposal (the "Carpenters
Proposal"). In the Company's no-action request, we represented that Honeywell
received the Carpenters Proposal on November 2, 2007. While Rule 14a-8 does not
require the submission of evidence as to the date or time of receipt of each
proposal at issue to support a request for no-action relief under Rule
14a-8(i)(11), in order to address Mr. Chevedden's concerns we are enclosing
herewith the facsimile cover page for the Carpenters Proposal, which is dated
November 2, 2007 (and which also reflects a contemporaneous handwritten notation
of the date on which the facsimile was received). Additionally, given that
facsimiles sent to Honeywell are received electronically and e-mailed to
individual e-mail in-boxes, we are also enclosing herewith copies of the e-mails
that reflect, in the subject line, the date that the Carpenters Proposal was
received by Honeywell, November 2, 2007, and the date that the Steiner Proposal
was received by Honeywell, November 6, 2007. These enclosures confirm the
Company's representation in its no-action request that the Carpenters Proposal
was received by Honeywell first in time on November 2, 2007.
For the foregoing reasons, along with those presented in the Company's no-action
request, Honeywell reiterates its request that the Staff confirm that it may
omit the Steiner Proposal from its 2008 proxy materials under Rule 14a-8(i)(11)
as substantially duplicative of the previously submitted Carpenters Proposal.
Very truly yours,
/s/
Thomas F. Larkins Vice President, Corporate Secretary, and Deputy General
Counsel
Enclosures
cc: Mr. William Steiner Mr. John Chevedden (via e-mail)
[APPENDIX 1]
William Steiner 112 Abbottsford Gate Piermont, NY 10968
Mr. David Cote Chairman Honeywell International (HON) 101 Columbia Road, P.O.
Box 4000 Morristown, NJ 07962 PH: 973-455-2000 FX: 973-455-4002
Rule 14a-8 Proposal
Dear Mr. Cote,
This Rule 14a-8 proposal is respectfully submitted in support of the long-term
performance of our company. This proposal is submitted for the next annual
shareholder meeting. Rule 14a-8 requirements are intended to be met including
the continuous ownership of the required stock value until after the date of the
respective shareholder meeting and the presentation of this proposal at the
annual meeting. This submitted format, with the shareholder-supplied emphasis,
is intended to be used for definitive proxy publication. This is the proxy for
John Chevedden and/or his designee to act on my behalf regarding this Rule 14a-8
proposal for the forthcoming shareholder meeting before, during and after the
forthcoming shareholder meeting. Please direct all future communication to John
Chevedden at:
olmsted7p (at) earthlink.net (In the interest of company cost savings and
efficiency please communicate via email.) PH: 310-371-7872 2215 Nelson Ave., No.
205 Redondo Beach, CA 90278
Your consideration and the consideration of the Board of Directors is
appreciated in support of the long-term performance of our company. Please
acknowledge receipt of this proposal by email.
Sincerely,
/s/
William Steiner
Date 10/12/07
cc: Thomas Larkins Corporate Secretary PH: 973-455-5208 FX: 973-455-4413
[APPENDIX 2]
[HON: Rule 14a-8 Proposal, November 6, 2007]
3 - Performance Based Stock Options
Resolved, Shareholders request that our Board of Directors adopt a policy or
bylaw whereby 75% of future equity compensation (stock options and restricted
stock) awarded to senior executives shall be performance-based, and the
performance criteria adopted by the Board disclosed to shareowners.
"Performance-based" equity compensation is defined here as:
(a) Indexed stock options, the exercise price of which is linked to an industry
index;
(b) Premium-priced stock options, the exercise price of which is substantially
above the market price on the grant date; or
(c) Performance-vesting options or restricted stock, which vest only when the
market price of the stock exceeds a specific target for a substantial period.
This is not intended to unlawfully interfere with existing employment contracts.
However, if there is a conflict with any existing employment contract, our
Compensation Committee is urged for the good of our company to negotiate revised
contracts consistent with this proposal.
As a long-term shareholder, I support pay policies for senior executives that
provide challenging performance objectives that motivate executives to achieve
long-term shareowner value. I believe that a greater reliance on
performance-based equity grants is particularly warranted at Honeywell given the
critique by The Corporate Library http://www.thecorporatelibrary.com. an
independent investment research firm:
"The [Honeywell] compensation rating has been designated as a high concern
because of excessive compensation awarded to David M. Cote. Chairman and CEO,
relating to salary. perks. and tax reimbursement payments."
Warren Buffett criticized standard stock options as "a royalty on the passage of
time" and favors indexed options. In contrast. peer-indexed options reward
executives for outperforming their direct competitors and discourage re-pricing.
Premium-priced options reward executives who enhance overall shareholder value.
Performance-vesting equity grants tie compensation more closely to key measures
of shareholder value, such as share appreciation and net operating income.
thereby encouraging executives to set and meet performance targets.
This proposal topic won 43%-suport at our 2007 annual meeting and 57%-support at
Lucent Technologies (LU) in 2006.
The Corporate Library said the current level of executive compensation does not
align the interests of our CEO with the interests of shareholders. Mr. Cote, in
just 5 years as CEO and with 5 years of total service with the company, has
already accrued pension benefits worth an estimated $24 million. He also
received over half a million dollars in "all other compensation" for items such
as use of company aircraft and tax gross ups.
Encourage our board to respond positively to this proposal:
Notes:
William Steiner, 112 Abbottsford Gate, Piermont, NY 10968 sponsors this
proposal.
The above format is requested for publication without re-editing, re-formatting
or elimination of text, including beginning and concluding text, unless prior
agreement is reached. It is respectfully requested that this proposal be
proofread before it is published in the definitive proxy to ensure that the
integrity of the submitted format is replicated in the proxy materials. Please
advise if there is any typographical question.
Please note that the title of the proposal is part of the argument in favor of
the proposal. In the interest of clarity and to avoid confusion the title of
this and each other ballot item is requested to be consistent throughout all the
proxy materials.
The company is requested to assign a proposal number (represented by "3" above)
based on the chronological order in which proposals are submitted. The requested
designation of "3" or higher number allows for ratification of auditors to be
item 2.
This proposal is believed to conform with Staff Legal Bulletin No. 14B (CF),
September 15, 2004 including:
Accordingly. going forward, we believe that it would not be appropriate for
companies to exclude supporting statement language and/or an entire proposal in
reliance on rule 14a-8(i)(3) in the following circumstances:
the company objects to factual assertions because they are not supported;
the company objects to factual assertions that. while not materially false or
misleading, may be disputed or countered;
the company objects to factual assertions because those assertions may be
interpreted by shareholders in a manner that is unfavorable to the company, its
directors, or its officers; and/or
the company objects to statements because they represent the opinion of the
shareholder proponent or a referenced source, but the statements are not
identified specifically as such.
See also: Sun Microsystems, Inc. (July 21, 2005).
Stock will be held until after the annual meeting and the proposal will be
presented at the annual meeting.
Please acknowledge this proposal promptly by email and advise the most
convenient fax number and email address to forward a broker letter. if needed,
to the Corporate Secretary's office.
[INQUIRY LETTER]
December 24, 2007
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
# 1 Honeywell International (HON) Shareholder Position on Company No-Action
Request Rule 14a-8 Proposal: Performance Based Stock Options William Steiner
Ladies and Gentlemen:
The company failed to submit evidence of the date or time that the United
Brotherhood of Carpenters and Joiners of America rule 14a-8 proposal was
purportedly received. The company does not even claim to posses such evidence.
Plus the company had more than adequate time to produce such evidence. Therefore
there is clearly no means to determine whether the United Brotherhood of
Carpenters and Joiners of America rule 14a-8 proposal was received before or
after Mr. Steiner's proposal.
For these reasons it is respectfully requested that concurrence not be granted
to the company on the purported basis of duplication. It is also respectfully
requested that the shareholder have the last opportunity to submit material in
support of including this proposal - since the company had the first
opportunity.
Sincerely,
John Chevedden
cc: William Steiner
Thomas Larkins<Tom.Larkins@Honeywell.com>Corporate Secretary
[INQUIRY LETTER]
January 10, 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
# 2 Honeywell International (HON) Shareholder Position on Company No-Action
Request Rule 14a-8 Proposal: Performance Based Stock Options William Steiner
Ladies and Gentlemen:
The company January 9, 2008 letter raises more questions than it answers. Plus
it does not quote any text from rule 14a-8 that supposedly enables a conclusion
on which proposal was received first by not requiring any "date or time of
receipt" evidence whatsoever.
The company first produces five rule 14a-8 proposal pages with a machine
generated future date of "Mar 19 2034." There is handwriting of "Rec'd 11/2/07"
but there is no way to verify who wrote it, when it was written or whether it is
correct.
Then the company produced a page or part of a page that states: "UnknownFaxMachine."
The brief text on this page does not even indicate the number of pages that are
in the "message received."
The company dos not explain how a person outside the company could determine
that this "UnknownFaxMachine" page matches the 5-pages with the future date of
"Mar 19 2034." The company does not attempt an explanation such as this is the
only "UnknownFaxMachine" fax that it received over a period of time, and
therefore it must be a match.
A copy of this letter is forwarded to the company in a non-PDF email. In order
to expedite the rule 14a-8 process it is requested that the company forward any
addition rule 14a-8 response in the same type format to the undersigned.
For these reasons and the December 24, 2007 reasons it is requested that the
staff find that this resolution cannot be omitted from the company proxy. It is
also respectfully requested that the shareholder have the last opportunity to
submit material in support of including this proposal - since the company had
the first opportunity.
Sincerely,
John Chevedden
cc: William Steiner
Thomas Larkins<Tom.Larkins@Honeywell.com>Corporate Secretary
[STAFF REPLY LETTER]
February 15, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Honeywell International Inc. Incoming letter dated December 20, 2007
The proposal requests that the board of directors adopt a policy or bylaw
whereby 75% of future equity compensation awarded to senior executives shall be
performance-based.
There appears to be some basis for your view that Honeywell may exclude the
proposal under rule 14a-8(i)(11), as substantially duplicative of a previously
submitted proposal that will be included in Honeywell's 2008 proxy materials.
Accordingly, we will not recommend enforcement action to the Commission if
Honeywell omits the proposal from its proxy materials in reliance on rule
14a-8(i)(11).
Sincerely,
/s/
John R. Fieldsend
Attorney-Adviser
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