Shareholders Urge Honeywell to Link CEO, Worker Pay

Press Release
For Immediate Release - April 26, 2000
Contact:">Stacie Garnett
(617) 423-2148 x19

Update . . . 4/27/00

Preliminary Vote Results

% voting YES: 11.7%

Note: Shareholder resolutions face a variety of obstacles. For this reason, it is considered significant if a resolution garners at least 5% of the vote. Votes over 10% indicate exceptional shareholder support for an issue.

Filers of "social-issue" resolutions generally don't expect their resolution to receive a majority vote and be adopted by management. Rather, filers use these resolutions to get management's attention, and to raise the issue with other shareholders. They hope to achieve a vote sufficient to allow them to return the next year.

According to SEC rules, a resolution must receive 3% of the vote the first year it is filed, 6% in year two and 10% thereafter in order to be included on the proxy the following year.

Shareholders Urge Honeywell to Link CEO, Worker Pay

Shareholders will present a resolution at Honeywell’s annual meeting on Monday, May 1, in Morris Township, NJ, calling on the company to establish a maximum ratio between the pay of the CEO and the lowest paid worker.

Lawrence Bossidy, who retired earlier this month as Honeywell chairman and was CEO of AlliedSignal before the two companies merged, received $48 million in total compensation for 1999. That amounts to 1,846 times the average US factory worker’s salary of about $26,000. This is even more outrageous than the 475 to 1 ratio of the average CEO’s pay to average worker’s pay reported by Business Week.

"If we visualize Mr. Bossidy’s pay as being represented by the Empire State Building, towering 1,454 feet high, then the typical factory worker’s pay would be represented by a building less than 10 inches tall. A Honeywell factory worker in Mexico earning $5,000 a year would be represented by a building less than two inches tall," said Scott Klinger, Co-director of Responsible Wealth, who will present the resolution at the meeting.

Honeywell CEO Michael Bonsignore hauled in $34 million last year, including realized stock options and grants, according to the Wall Street Journal. While Mr. Bossidy and Mr. Bonsignore were each awarded $1 million merger completion bonuses, Honeywell plans to eliminate about 11,600 jobs, according to their annual report.

The shareholder resolution does not propose an ideal ratio between CEO pay and the salary of the lowest paid worker, but asks the company to study the situation and justify their decision to shareholders. The resolution is similar to one filed last year with AlliedSignal that won a surprising 12 percent of the vote. (Because of proxy voting procedures that favor management, shareholder-sponsored resolutions rarely win more than 10 percent.)

"Asking Honeywell to link CEO pay to that of the lowest paid worker is recognition that the CEO is not solely responsible for company value," said Klinger. "Paying the CEO over a thousand times more than typical workers sends them the wrong message about the value of hard work."

The shareholder resolution is one of 14 filed by Responsible Wealth, a growing network of over 450 affluent business owners and investors, to encourage companies to share rewards more widely. Responsible Wealth recently released a groundbreaking report, Choosing the High Road: Businesses That Pay a Living Wage and Prosper.

Click here for a copy of the resolution.