HON Honeywell International Inc

PROPOSAL NO. 1: ELECTION OF DIRECTORS

Honeywell’s directors are elected at each Annual Meeting of Shareowners and hold office for one-year terms or until their successors are duly elected and qualified. Honeywell’s By-laws provide that in any uncontested election of directors (an election in which the number of nominees does not exceed the number of directors to be elected), any nominee who receives a greater number of votes cast “FOR” his or her election than votes cast “AGAINST” his or her election will be elected to the Board of Directors.

The Board has nominated 12 candidates for election as directors. If any nominee should become unavailable to serve prior to the Annual Meeting, the shares represented by a properly signed and returned proxy card or voted by telephone, via the Internet or by scanning the QR code will be voted for the election of such other person as may be designated by the Board. The Board may also determine to leave the vacancy temporarily unfilled or reduce the authorized number of directors in accordance with the By-laws.

In 2017, the mandatory retirement age for directors was increased from 72 to 75. The retirement age increase was implemented to ensure Board continuity during a successful CEO succession process that the Board implemented in 2017 and during a period where we are undertaking a major portfolio realignment, including the spin-offs of two significant business units. As a result, directors may serve until the Annual Meeting of Shareowners immediately following their 75th birthday. For further detail on the increase in the mandatory retirement age, see “Summary of Improvements To Our Governance Guidelines in 2017” on page 12.

DIRECTOR NOMINATIONS — SKILLS AND CRITERIA

The Corporate Governance and Responsibility Committee (“CGRC”) is responsible for nominating a slate of Director nominees who collectively have the complementary experience, qualifications, skills and attributes to guide the Company and function effectively as a Board. In 2017, the Board reviewed its processes and procedures for nominating Directors to ensure that the skills, experience and perspective of the Board, and the Board’s ability to periodically refresh those attributes, keeps pace with an evolving commercial strategy focused on Honeywell becoming a world-leading software industrial company. As a result of that review, the Board updated its Corporate Governance Guidelines so that Director nominations are now subject to the following:

The CGRC believes that each of the nominees presented in this proxy has key personal attributes that are important to an effective board: integrity, candor, analytical skills, the willingness to engage management and each other in a constructive and collaborative fashion, and the ability and commitment to devote significant time and energy to service on the Board and its Committees.

The following list highlights other key experiences, qualifications and skills of our Director nominees that are relevant and important in light of Honeywell’s businesses and structure.

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Proposal No. 1: Election of Directors > Director Nominations-Skills and Criteria

Each of the nominees, other than Mr. Adamczyk, is independent of the Company and management. See “Director Independence” on page 21 of this proxy statement.

The CGRC also considered the specific experience described in the biographical details that follow in determining to nominate the following individuals for election as directors.

The Board of Directors unanimously recommends a vote FOR the election of each of the director nominees.

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Proposal No. 1: Election of Directors > Nominees for Election

NOMINEES FOR ELECTION

DARIUS ADAMCZYK, President and Chief Executive Officer of Honeywell International Inc.

 

Years of Service: 1 Age: 52

Mr. Adamczyk is the President and Chief Executive Officer of Honeywell since March 2017. Mr. Adamczyk was President and Chief Operating Officer from April 2016 to March 2017. From April 2014 to April 2016, Mr. Adamczyk served as President and CEO of Honeywell Performance Materials and Technologies (“PMT”). Prior to serving as President and CEO of PMT, Mr. Adamczyk served as President of Honeywell Process Solutions from 2012 to 2014. When he joined Honeywell in 2008, he became President of Honeywell Scanning & Mobility from 2008 to 2012. Mr. Adamczyk began at Honeywell when Metrologic, Inc., where he was the Chief Executive Officer, was acquired by Honeywell. Prior to joining Honeywell, Mr. Adamczyk held several general management assignments at Ingersoll Rand, served as a senior associate at Booz Allen Hamilton, and started his career as an electrical engineer at General Electric.

 

Specific Qualifications, Attributes, Skills and Experience

•	Senior leadership roles in global organizations, both large and small
•	Deep understanding of software, both technically and commercially, and a proven track record in growing software-related businesses at Honeywell
•	Demonstrated ability to deliver financial results as a leader in a variety of different industries, with disparate business models, technologies and customers
•	Strategic leadership skills necessary to grow Honeywell revenues organically and inorganically while meeting the challenges of a constantly changing environment across Honeywell’s diverse business portfolio

DUNCAN B. ANGOVE, President of Infor, Inc.

 

Years of Service: 0 Age: 51

Since 2010, Mr. Angove has been President of Infor, Inc., a privately-held provider of enterprise software and a strategic technology partner for more than 90,000 organizations worldwide. The software is purpose-built for specific industries, from manufacturing to healthcare, providing complete suites that are designed to support end-to-end business processes and digital transformation. Previously, Mr. Angove served as the Senior Vice-President and General Manager of the Retail Global Business Unit for Oracle Corporation, a global technology provider of enterprise software, hardware and services, from 2005 to 2010. He joined Oracle through its acquisition of Retek Inc., then a publicly-traded provider of software solutions and services to the retail industry, where he served in various roles of increasing responsibility from 1997 until 2005.

 

Specific Qualifications, Attributes, Skills and Experience

•	Senior technology industry leader with global operating experience including in software and digital transformation
•	Deep understanding of the trends across enterprise cloud, infrastructure software, digital, and the internet of things and skilled at driving value creation
•	Extensive experience in corporate strategy, M&A, sales, marketing and business and product development

WILLIAM S. AYER, Retired Chairman and Chief Executive Officer of Alaska Air Group, Inc. (Alaska Air Group)

 

Years of Service: 3 Age: 63   Board Committees: •  Corporate Governance & Responsibility •  Management Development & Compensation

Mr. Ayer is the retired Chairman of the Board and Chief Executive Officer of Alaska Air Group, the parent company of Alaska Airlines and its sister carrier, Horizon Air. Mr. Ayer served as Chief Executive Officer of Alaska Air Group and its subsidiaries through 2012, and as Chairman through 2013. A veteran of more than three decades in aviation, Mr. Ayer began his career with Horizon Air in 1982 where he held a variety of marketing and operations positions. He joined Alaska Airlines in 1995 as Vice President of Marketing and Planning, and subsequently held the posts of Senior Vice President, Chief Operating Officer, and President. In 2002, he became Alaska Air Group’s Chief Executive Officer, and, in May 2003, he was appointed Chairman. Mr. Ayer was a director of Puget Sound Energy, Inc. and Puget Energy, Inc. from January 2005 until January 2015 and served as Chairman from January 2009 until January 2015.

 

Specific Qualifications, Attributes, Skills and Experience

•	Deep aerospace industry knowledge as well as sales, marketing and operations experience through his three decades of leadership roles at Alaska Air Group, recognized for its best-in-class operating metrics among U.S. air carriers
•	Proven leadership skills in developing a business enterprise that can deliver long-term, sustained excellence based on a management style that includes a relentless focus on the customer, continuous improvement, and building a culture of safety, innovation, sustainability and diversity
•	Understanding of the U.S. public utility industry through his service as a director on the Board of Puget Energy

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Proposal No. 1: Election of Directors > Nominees for Election

KEVIN BURKE, Retired Chairman, President and Chief Executive Officer of Consolidated Edison, Inc. (Con Edison)

 

Years of Service: 8 Age: 67   Board Committees: •  Audit •  Retirement Plans

Mr. Burke joined Con Edison, a utility provider of electric, gas and steam services, in 1973 and held positions of increasing responsibility in system planning, engineering, law, nuclear power, construction, and corporate planning. He served as Senior Vice President from July 1998 to July 1999, with responsibility for customer service and for Con Edison’s electric transmission and distribution systems. In 1999, Mr. Burke was elected President of Orange & Rockland Utilities, Inc., a subsidiary of Con Edison. He was elected President and Chief Operating Officer of Consolidated Edison Company of New York, Inc. in 2000 and elected Chief Executive Officer in 2005. Mr. Burke served as President and Chief Executive Officer of Con Edison from 2005 through 2013, and was elected Chairman in 2006. Mr. Burke became non-executive Chairman of Con Edison in December 2013 and served in that capacity until April 2014. Mr. Burke was a member of the Board of Directors of Con Edison and a member of the Board of Trustees of Consolidated Edison Company of New York, Inc. which is a subsidiary of Con Edison, until May 2015.

 

Specific Qualifications, Attributes, Skills and Experience

•	Extensive management expertise gained through various executive positions, including senior leadership roles, at Con Edison
•	Wealth of experience in energy production and distribution, energy efficiency, alternative energy sources, engineering and construction, government regulation and development of new service offerings
•	Significant expertise in developing clean and renewable energy infrastructure technology used in clean energy, solar generation, and other energy efficient products and services
•	Oversaw the implementation of financial and management information systems, utility operational systems and process simulators
•	Deep knowledge of corporate governance and regulatory issues facing the energy, utility and service industries

JAIME CHICO PARDO, President and Chief Executive Officer, ENESA, S.A. de C.V. (ENESA)

 

Years of Service: 18 Age: 68   Lead Director   Ex officio member of each Board Committee

Mr. Chico Pardo has been President and Chief Executive Officer of ENESA, a private fund investing in the Mexican energy and health care sectors since March 2010. He previously served as Co-Chairman of the Board of Telefonos de Mexico, S.A.B. de C.V. (TELMEX), a telecommunications company based in Mexico City, from April 2009 until April 2010 and as its Chairman from October 2006 to April 2009 and its Vice Chairman and Chief Executive Officer from 1995 until 2006. Mr. Chico Pardo was Co-Chairman of the Board of Impulsora del Desarrollo y el Empleo en América Latina, S.A. de C.V., a publicly listed company in Mexico engaged in investment in and management of infrastructure assets in Latin America, from 2006 until 2010. He was also Chairman of Carso Global Telecom, S.A. de C.V. from 1996 until 2010. Prior to joining TELMEX, Mr. Chico Pardo served as President and Chief Executive Officer of Grupo Condumex, S.A. de C.V. and Euzkadi/General Tire de Mexico, manufacturers of products for the construction, automotive and telecommunications industries. Mr. Chico Pardo has also spent a number of years in the international and investment banking business. Mr. Chico Pardo is a director of Grupo Bimbo, S.A.B. de C.V. He previously served as a director of AT&T (2008-2015), Grupo Carso, S.A. de C.V. and several of its affiliates (1991-2013), three mutual funds in the American Funds family of mutual funds (2011-2013) and Honeywell Inc. from September 1998 to December 1999.

 

Specific Qualifications, Attributes, Skills and Expertise

•	Broad international exposure through senior leadership roles in Latin American companies in the telecommunications, automotive, manufacturing, engineering and construction industries
•	Expertise in the management of infrastructure assets and international business, operations and finance focused on Latin America
•	Broad experience with investment strategies in innovation and technology to support the energy, healthcare and telecommunications industries in Mexico and Latin America
•	Enhanced perspectives on corporate governance, risk management and other issues applicable to public companies

D. SCOTT DAVIS, Retired Chairman and Chief Executive Officer of United Parcel Service, Inc. (UPS)

 

Years of Service: 12 Age: 66   Board Committees: •    Management Development & Compensation Committee Chairperson •    Audit

Mr. Davis joined UPS, a leading global provider of package delivery, specialized transportation and logistics services in 1986. He served as the non-Executive Chairman of UPS from September 2014 until May 2016. Prior to his retirement as Chief Executive Officer of UPS, Mr. Davis served as Chairman and Chief Executive Officer from January 1, 2008 to September 2014. Prior to this, he served as Vice Chairman since December 2006 and as Senior Vice President, Chief Financial Officer and Treasurer since January 2001. Previously, Mr. Davis held various leadership positions with UPS, primarily in the finance and accounting areas. During his tenure at UPS, Mr. Davis served a critical role in helping UPS to reinvent itself into a technology company as well as transportation. Prior to joining UPS, he was Chief Executive Officer of II Morrow Inc., a technology company and developer of general aviation and marine navigation instruments. Mr. Davis is a Certified Public Accountant. He is also a director of Johnson & Johnson. Mr. Davis previously served on the Board of the Federal Reserve Bank of Atlanta (2003-2009), serving as Chairman in 2009, and EndoChoice Holdings (2015-2016).

 

Specific Qualifications, Attributes, Skills and Experience

•	Significant expertise in management, strategy, finance and operations gained over 25 years at UPS including through senior leadership roles
•	Financial management expertise, including financial reporting, accounting and controls
•	Strong banking experience and a deep understanding of public policy and global economic indicators
•	Extensive experience in the transportation and logistics services industry
•	In-depth understanding of technology and software solutions that support automated and web-based shipping, tracking and specialized transportation Logistics

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Proposal No. 1: Election of Directors > Nominees for Election

LINNET F. DEILY, Former Deputy U.S. Trade Representative and Ambassador

 

Years of Service: 12 Age: 72   Board Committees: •    Corporate Governance & Responsibility Committee Chairperson •    Audit

Ms. Deily was Deputy U.S. Trade Representative and U.S. Ambassador to the World Trade Organization from 2001 to 2005. From 2000 until 2001, she was Vice Chairman of The Charles Schwab Corp. Ms. Deily served as President of the Schwab Retail Group from 1998 until 2000 and President of Schwab Institutional-Services for Investment Managers from 1996 to 1998. Prior to joining Schwab, she was the Chairman of the Board, Chief Executive Officer and President of First Interstate Bank of Texas from 1990 until 1996. She is also a director of Chevron Corporation.

 

Specific Qualifications, Attributes, Skills and Experience

•	Unique global and governmental perspectives regarding international trade, capital markets, public policy, telecommunications, information services, corporate finance, refinery and petrochemical industries
•	Extensive experience leading international trade negotiations and detailed knowledge and insight into challenges and opportunities related to government relations
•	Broad experience managing technology platforms for investment managers and retail clients
•	Significant financial experience through senior leadership roles in banking, brokerage and financial services companies
•	Substantial experience as a Fortune 500 company director

JUDD GREGG, Former Governor and U.S. Senator of New Hampshire

 

Years of Service: 7 Age: 71   Board Committees: •    Corporate Governance & Responsibility •    Audit

Senator Gregg has spent over three decades in public office, most recently serving as the United States Senator from the State of New Hampshire from January 1993 until January 2011. During his tenure in the Senate, Senator Gregg served on a number of key Senate Committees including Budget; Appropriations; Government Affairs; Banking, Housing and Urban Affairs; Commerce, Science and Transportation; Foreign Relations; and Health, Education, Labor and Pensions. He has served as the Chairman and Ranking Member of the Health, Education, Labor and Pensions Committee and the Chairman and Ranking Member of the Senate Budget Committee as well as chairman of various sub-committees. Senator Gregg served as a chief negotiator of the Emergency Economic Stabilization Act of 2008 and was the lead sponsor of the Deficit Reduction Act of 2005, and, along with the late Senator Ted Kennedy, co-authored the No Child Left Behind Act of 2001. In March 2010, Senator Gregg was appointed to President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform. From 1989 to 1993, Senator Gregg was the Governor of New Hampshire and prior to that was a U.S. Representative from 1981 to 1989. Senator Gregg was named as Dartmouth College’s first distinguished fellow and he teaches at the college and its graduate schools. He also serves as a director of Evoqua Corporation. Senator Gregg previously served as a director of Intercontinental Exchange, Inc. (2011-2013).

 

Specific Qualifications, Attributes, Skills and Experience

•	Deep understanding and experience in local, state, national and international issues
•	Extensive experience in government, public policy, financial regulatory reform, banking, tax, capital markets, science, renewable technology and research, environmental protection and conservation, healthcare and foreign policy
•	Significant insight into fiscal affairs, governmental relations, legislative and regulatory issues

CLIVE HOLLICK, Former Chief Executive Officer of United Business Media

 

Years of Service: 14 Age: 72   Board Committees: •    Management Development & Compensation •    Retirement Plans

Lord Hollick was Chief Executive Officer of United Business Media and its predecessor companies from 1974 to 2005. United was a London-based, international information, broadcasting, financial services and publishing group. From 2005 to 2010, he was a partner, managing director and adviser to Kohlberg Kravis Roberts & Co., a private equity firm focusing on businesses in the media and financial services sectors. Lord Hollick is a partner of GP Bullhound LLP and a member of the Advisory Board of Jefferies Inc. In addition, Lord Hollick was Chairman of the Economic Affairs Committee of the House of Lords. He previously served as a director of ProSiebenSat. 1 Media AG (2007-2014), Gogo Inc. (2013-2014), The Nielsen Company B.V. (2006-2009), Diageo plc (2001-2011), TRW Inc. (2000-2002) and BAE Systems (1992-1997).

 

Specific Qualifications, Attributes, Skills and Experience

•	Management expertise and diverse perspective on international and media experience gained through over 30 years as the leader of United Business Media
•	Deep knowledge of public policy and trends in the UK and European markets
•	In-depth understanding of the operating environment in the UK and Europe particularly with respect to information and financial services, broadcasting, publishing and online media, marketing and branding, technology and innovation
•	Substantial experience in mergers and acquisitions in the media and financial services sectors, including in a private equity context

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Proposal No. 1: Election of Directors > Nominees for Election

GRACE D. LIEBLEIN, Former Vice President-Global Quality of General Motors Corporation (GM)

 

Years of Service: 5 Age: 57   Board Committees: • Corporate Governance & Responsibility • Management Development & Compensation

Ms. Lieblein served as Vice President, Global Quality of GM, a company that designs, manufactures and markets cars, crossovers, trucks, and automobile parts worldwide from November 2014 to March 2016. Ms. Lieblein served as Vice President, Global Purchasing and Supply Chain from December 2012 to November 2014, the GM Brazil President and Managing Director from June 2011 until December 2012, the GM Mexico President and Managing Director from January 2009 until June 2011 and Vehicle Chief Engineer from October 2004 to January 2009. Ms. Lieblein joined GM in 1978 as a co-op student at the General Motors Assembly Division in Los Angeles and has held a variety of leadership positions at GM in engineering, product development and manufacturing. Ms. Lieblein is also a director of Southwest Airlines Co. and American Tower Corporation.

 

Specific Qualifications, Attributes, Skills and Experience

•	Wide-ranging management and operating experience gained through various executive positions in an extensive career at GM
•	Significant expertise in supply chain management, global manufacturing, engineering, technology and product design and development
•	International business, operations and finance experience gained through senior leadership positions in Brazil and Mexico

GEORGE PAZ, Chairman and Retired Chief Executive Officer of Express Scripts Holding Company (Express Scripts)

 

Years of Service: 9 Age: 62   Board Committees: • Corporate Governance & Responsibility • Audit Committee Chairperson

Mr. Paz has served as Chairman of the Board of Express Scripts, a pharmacy benefit management company, since May 2006, as Chief Executive Officer from April 2005 to May 2016 and as President from October 2003 to February 2014. He has served as a director of Express Scripts since January 2004. Mr. Paz joined Express Scripts as Senior Vice President and Chief Financial Officer in January 1998 and continued to serve as its Chief Financial Officer following his election as President until April 2004. Mr. Paz is a Certified Public Accountant. He is also a director of Prudential Financial, Inc.

 

Specific Qualifications, Attributes, Skills and Experience

•	Significant management and finance experience gained through senior leadership positions at Express Scripts
•	Financial expertise, including in tax, financial reporting, accounting and controls
•	Information technology expertise in the healthcare and pharmaceutical industries and a strong track record of developing automated solutions in the healthcare marketplace
•	Developed technologies for adjudication, compliance, prior authorization and safety standards in healthcare
•	Extensive experience in corporate finance, insurance and risk management, mergers and acquisitions, capital markets, government regulation and employee health benefits

ROBIN L. WASHINGTON, Executive Vice President and Chief Financial Officer of Gilead Sciences, Inc. (Gilead)

 

Years of Service: 5 Age: 55   Board Committees: • Audit • Retirement Plans

Ms. Washington joined Gilead, a research-based biopharmaceutical company, as Senior Vice President and Chief Financial Officer in May 2008. In her current role as Executive Vice President and Chief Financial Officer, she oversees Gilead’s Global Finance, Investor Relations and Information Technology organizations. From 2006-2007, Ms. Washington served as Chief Financial Officer of Hyperion Solutions, an enterprise software company that was acquired by Oracle Corporation in March 2007. Prior to that, Ms. Washington spent nearly 10 years at PeopleSoft, a provider of enterprise application software, where she served in a number of executive positions, most recently in the role of Senior Vice President and Corporate Controller. Ms. Washington is a Certified Public Accountant. She is a director of Salesforce.com Inc. and previously served as a director of Tektronix, Inc. (acquired by Danaher Corporation) (2005-2007) and MIPS Technologies, Inc. (acquired by Imagination Technologies Group PLC) (2008-2013).

 

Specific Qualifications, Attributes, Skills and Experience

•	Extensive management, operational and accounting experience in the healthcare and information technology industries
•	Financial expertise, including in tax, financial reporting, accounting and controls, corporate finance, mergers and acquisitions and capital markets
•	Broad experience on corporate governance issues gained through public company directorships

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Corporate Governance > Summary of Improvements to our Governance Guidelines in 2017

CORPORATE GOVERNANCE

Honeywell is committed to strong corporate governance policies, practices and procedures designed to make the Board effective in exercising its oversight role. The following sections provide an overview of our corporate governance structure, particularly the developments and activities that occurred in 2017, and the responsibilities of the Board and each of its Committees. We also review our shareowner engagement program and feedback received as a result of that engagement.

SUMMARY OF IMPROVEMENTS TO OUR GOVERNANCE GUIDELINES IN 2017

Honeywell’s Board is committed to a spirit of “continuous improvement” and is always seeking ways to improve the efficacy of its governance policies, practices and procedures. During 2017, the Board made improvements to several aspects of its Corporate Governance Guidelines (“Guidelines”) to ensure that its practices remained contemporary and aligned with the needs of Honeywell’s shareowners. These improvements were driven, in significant part, by the CEO succession plan that the Board implemented in 2017 as well as the portfolio review and the resulting refocus of the commercial strategy announced by our CEO, Darius Adamczyk, in October 2017.

The revisions to the Guidelines described in detail below sought to balance two things:

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Corporate Governance > Board Leadership Structure

BOARD LEADERSHIP STRUCTURE

David M. Cote, our current Chairman and former CEO, will retire from the Honeywell Board at the April 2018 shareowners’ meeting. After careful consideration, Honeywell’s Board of Directors determined that it is in the best long-term interests of shareowners to appoint CEO Darius E. Adamczyk as Chairman after Mr. Cote’s retirement. The Board fully understands the importance of this Board leadership decision to its shareowners and has thoroughly explored the benefits and challenges of having Mr. Adamczyk serve as both Chairman and CEO through an open-minded and unbiased decision-making process.

In reaching its decision, the Board considered a wide range of factors more fully described on pages 85-86 where we respond in detail to a shareowner proposal on the need for an independent board chairman. The key factors influencing the Board’s decision to combine the roles of Chairman and CEO under Mr. Adamczyk are as follows:

As part of its deliberations, the Board carefully weighed the views of its shareholders. Our Lead Director, Mr. Jaime Chico Pardo, and the Chair of the Corporate Governance and Responsibility Committee, Ms. Linnet Deily, extended meeting invitations to 14 of our largest shareowners, representing approximately 32.29% of the shares entitled to vote at our Annual Meeting of Shareowners, for one-on-one meetings to discuss, among other things, the decision on whether to recombine the roles of Chairman and CEO under Mr. Adamczyk. During those meetings, we heard a range of views. Most of our shareowners had confidence that the Honeywell Board understands the importance of good corporate governance and has demonstrated the ability to make the right decision regarding its leadership structure, specifically the determination of whether and when to separate and combine the roles of Chairman and CEO. We more fully describe our robust shareowner engagement program on pages 4-5.

Lead Director

Honeywell’s Lead Director plays an important role in our governance structure, serving as the de facto leader of the independent directors and the single focal point charged with ensuring that the Board as a whole is providing appropriate independent oversight of management. Over the past several years, the Board has continually sought to strengthen the role of Lead Director, including in our most recent amendment to the Corporate Governance guidelines when we formalized the role of the Lead Director in the recruitment and selection of new Board members and the annual self-evaluation process.

The Lead Director is selected biennially by Honeywell’s independent directors. Mr. Jaime Chico Pardo’s first two-year term will expire at the April 2018 shareowners’ meeting. The Board has unanimously decided to re-elect Mr. Chico Pardo for a second two-year term. Before re-electing Mr. Chico Pardo, the Board carefully considered the Lead Director Selection Criteria memorialized in our Corporate Governance Guidelines. Below, we summarize those criteria and the ways in which Mr. Chico Pardo satisfies those criteria.

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Corporate Governance > Board Leadership Structure

 

Lead Director Selection Criteria		How Mr. Chico Pardo Satisfies Our Criteria
•    Able to commit the time and level of engagement required to fulfill the substantial responsibilities of the role.		•    Mr. Chico Pardo has worked tirelessly on behalf of Honeywell including assisting Honeywell in its efforts to increase organic sales growth in Mexico and across Latin America, meeting with shareowners, often in person, and participating in various external governance and lead director programs to stay current on best practices and investor concerns.
•    Effective communication skills to facilitate discussions among Board members, including between the non-management directors and the CEO/Chairman, and engage with key stakeholders.		•    Mr. Chico Pardo spends significant time soliciting the views of Board members on sensitive issues and sharing those views with Mr. Adamczyk and other Board members. Mr. Chico Pardo also proved himself to be an effective communicator in his numerous meetings with shareowners, both with respect to the significant changes made to our executive compensation programs in 2016 and governance changes in 2017.
•    Strong rapport with other members of the Board.		•    Mr. Chico Pardo is extremely well regarded by his fellow Board members for, among other things, his encyclopedic knowledge of Honeywell, listening and communication skills, excellent judgment and ability to build consensus for informed decision making.
•    High personal integrity and ethical character.		•    Mr. Chico Pardo has demonstrated a track record of conducting himself with the highest ethical standards, both in his long business career and as a Honeywell Board member.
•    Skills and experience broadly in line with Honeywell’s corporate strategy, including, as relevant:   ○    Leadership experience within a large, complex organization;   ○    International experience and exposure to a variety of markets; and   ○    Expertise aligned with key growth initiatives.   •    Qualifies as independent, in accordance with the Company’s bylaws and relevant listing standards.		•    Mr. Chico Pardo’s skills and experience are well suited for his service as Honeywell’s Lead Director. He has led large, complex business enterprises in a wide range of industries that are complementary to Honeywell’s businesses and its customers. His business and leadership activities have been truly global including managing significant business activities in North and Latin America.   •    Mr. Chico Pardo is independent in accordance with our bylaws and NYSE listing standards and, more importantly, with respect to his willingness to constructively challenge management with alternative perspectives and opinions.

GOVERNANCE BEST PRACTICES

Board Practices and Procedures

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Corporate Governance > Governance Best Practices

Honeywell’s Code of Business Conduct applies to all directors, officers (including the Chief Executive Officer, Chief Financial Officer and Controller) and employees. Amendments to or waivers of the Code of Business Conduct granted to any of Honeywell’s directors and executive officers will be published on our website.

Governance Highlights

Our Board of Directors oversees management performance on behalf of the shareowners to ensure that the long-term interests of the shareowners are being served, to monitor adherence to Honeywell standards and policies, and to promote the exercise of responsible corporate citizenship.

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Corporate Governance > Where Shareowners Can Find More Information

WHERE SHAREOWNERS CAN FIND MORE INFORMATION

These documents are available free of charge on our website or by writing to Honeywell, 115 Tabor Road, Morris Plains, New Jersey 07950, c/o Vice President and Corporate Secretary.

BOARD MEETINGS

The Board of Directors held seven meetings during 2017. The average attendance at meetings of the Board and Board Committees during 2017 was 97%. During this period, all of the directors attended or participated in at least 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by all Committees of the Board of Directors on which each such director served.

BOARD COMMITTEES

The Board currently has the following Committees: Audit; Corporate Governance and Responsibility; Management Development and Compensation; and Retirement Plans. Each Committee consists entirely of independent, non-employee directors. Each Committee operates under a written charter which is available on our website at www.honeywell.com (see “Investors/Corporate Governance/Board Committees”).

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Corporate Governance > Board Committees

Board Committee Oversight of Independent Accountants

The Audit Committee seeks to ensure the exercise of appropriate professional skepticism by the independent accountants by reviewing and discussing, among other things, management and auditor reports regarding significant estimates and judgments and the results of peer quality review and PCAOB inspections of the independent accountants. They also review and pre-approve all audit and non-audit services provided to Honeywell by the independent accountants in order to determine that such services would not adversely impact auditor independence and objectivity. The Audit Committee also holds separate executive sessions at each in-person meeting with representatives of our independent accountants, and with Honeywell’s Chief Financial Officer and Vice President-Corporate Audit. The Board has determined that Messrs. Paz, Burke, and Davis, and Mses. Deily and Washington satisfy the “accounting or related financial management expertise” requirements set forth in the NYSE listing standards, and has designated each of Mr. Paz, Mr. Davis and Ms. Washington as the Securities and Exchange Commission (“SEC”) defined “audit committee financial expert.” See page 81 for the Audit Committee Report.

Board Committee Retention of the Outside Compensation Consultant

The Management Development and Compensation Committee (“MDCC”) has sole authority to retain a compensation consultant to assist the MDCC in the evaluation of director, CEO or senior executive compensation, but only after considering all factors relevant to the consultant’s independence from management. In addition, the MDCC is directly responsible for approving the consultant’s compensation, evaluating its performance, and terminating its engagement. Under the MDCC’s established policy, its consultant cannot provide any other services to Honeywell. Since October 2009, the MDCC has retained Pearl Meyer (“PM”) as its independent compensation consultant.

The MDCC regularly reviews the services provided by its outside consultants and performs an annual assessment of the independence of its compensation consultant to determine whether the compensation consultant is independent. The MDCC conducted a specific review of its relationship with PM in 2017, and determined that PM is independent in providing Honeywell with executive compensation consulting services and that PM’s work for the MDCC did not raise any conflicts of interest, consistent with SEC rules and NYSE listing standards.

In making this determination, the MDCC reviewed information provided by PM on the following factors:

In particular, the MDCC noted that PM did not provide any services to the Company or its management other than service to the MDCC, and its services were limited to executive compensation consulting. Specifically, it does not provide, directly or indirectly through affiliates, any non-executive compensation services, including, but not limited to, pension consulting or human resources outsourcing. The MDCC will continue to monitor the independence of its compensation consultant on a periodic basis.

PM compiles information and provides advice regarding the components and mix (short-term/long-term; fixed/variable; cash/equity) of the executive compensation programs of Honeywell and its “Compensation Peer Group” (see pages 41-42 of this proxy statement for further detail regarding the Compensation Peer Group) and analyzes the relative performance of Honeywell and the Compensation Peer Group with respect to stock performance and the financial metrics generally used in the programs. PM also provides information regarding emerging trends and best practices in executive compensation. In addition to information compiled by PM, the MDCC also reviews general survey data compiled and published by third parties. Neither the MDCC nor Honeywell has any input into the scope of or the companies included in these third-party surveys.

While the MDCC reviews information provided by PM regarding compensation paid by the Compensation Peer Group, as well as third-party survey data, as a general indicator of relevant market conditions, the MDCC does not target a specific competitive position relative to the market in making its compensation determination.

PM reports to the MDCC Chair, has direct access to MDCC members, attends MDCC meetings either in person or by telephone, and meets with the MDCC in executive session without management present.

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Corporate Governance > Board’s Role in Risk Oversight

Compensation Input From Senior Management

The MDCC considers input from senior management in making determinations regarding the overall executive compensation program and the individual compensation of the executive officers.

As part of Honeywell’s annual planning process, the CEO, CFO and Senior Vice President—Human Resources, Procurement and Communications develop targets for Honeywell’s incentive compensation programs and present them to the MDCC. These targets are reviewed by the MDCC to ensure alignment with our strategic and annual operating plans, taking into account the targeted year-over-year and multi-year improvements as well as identified opportunities and risks. The CEO recommends base salary adjustments and cash and equity incentive award levels for Honeywell’s other executive officers. These recommendations are based on performance appraisals (including an assessment of the achievement of pre-established financial and non-financial management objectives) together with a review of supplemental performance measures and prior compensation levels relative to performance.

Each year, the CEO presents to the MDCC and the full Board his evaluation of each executive officer’s contribution and performance over the past year, strengths and development needs and actions, and reviews succession plans for each of the executive officers.

BOARD’S ROLE IN RISK OVERSIGHT

While senior management has primary responsibility for managing risk, the Board as a whole has responsibility for risk oversight. Relevant Board Committees review specific risk areas, as enumerated below, and report on their deliberations to the Board. The full Board oversees risk in several ways. Through regular updates on the financial and operating results of Honeywell, as well as the annual operating and five-year strategic plans of each Strategic Business Group (“SBG”), management provides the Board with its view of the key commercial and strategic risks faced by each business unit. During those presentations, the Board is able to provide management with feedback on whether management has identified the key risks and is taking appropriate actions to mitigate risk. In addition, management reports to the Board and each Committee periodically on specific, material risks as they arise or as requested by individual Board members.

In addition, the Board uses the Enterprise Risk Management or ERM program as a key tool for understanding the inherent risks facing Honeywell as well as assessing whether management’s processes, procedures and practices for mitigating those risks are effective. Both the Audit Committee and full Board review the results of the annual ERM assessment. Honeywell’s CFO and General Counsel jointly present the results of the ERM assessment and the presentations are designed to provide full visibility into the risks facing Honeywell and how management is mitigating those risks, thereby enabling the Board to effectively exercise its oversight function. The ERM assessment deployed by management is robust, based on both an enterprise-wide “top down” and “bottom up” view of commercial, strategic, legal, compliance, cyber and reputational risks and strategies for mitigating those risks.

In addition, every three years one-on-one meetings are held with each Board member and the CFO, General Counsel, Controller and Vice President, Internal Audit to solicit feedback on Honeywell’s ERM process to ensure that the universe of risks and how management ranks those risks, in terms of likelihood of occurrence and financial impact, is both realistic and appropriate. Feedback from the one-on-one interviews with the individual Board member is presented to the full Board and incorporated in our ERM program and risk mitigation efforts. In 2018, one-on-one interviews will be scheduled with each Board member.

The specific risk areas of focus for the Board and each of its Committees are summarized below. In addition, the Audit Committee and the MDCC meet in executive session with key management personnel (for example, the Vice President, Internal Audit meets in executive session with the Audit Committee) and in certain instances representatives of outside advisors (for example, the Audit Committee regularly meets in executive session with the Company’s independent auditors).

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Corporate Governance > Director Independence

DIRECTOR INDEPENDENCE

Our Corporate Governance Guidelines state that the “Board intends that, at all times, a substantial majority of its directors will be considered independent under relevant NYSE and SEC guidelines.” The Corporate Governance and Responsibility Committee conducts an annual review of the independence of the directors and reports its findings to the full Board.

Based on the report and recommendation of the Corporate Governance and Responsibility Committee, the Board has determined that each of the non-employee nominees standing for election to the Board at the Annual Meeting—Messrs. Angove, Ayer, Burke, Chico Pardo, Davis, Gregg, Hollick, and Paz and Mses. Deily, Lieblein and Washington—satisfies the independence criteria in the applicable NYSE listing standards and SEC rules (including the enhanced criteria with respect to members of the Audit Committee and the MDCC). Each Board Committee member qualifies as a non-employee director within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

For a director to be considered independent, the Board must determine that the director does not have any material relationships with Honeywell, either directly as a partner, shareowner or officer of an organization that has a relationship with Honeywell, other than as a director and shareowner. Material relationships can include vendor, supplier, consulting, legal, banking, accounting, charitable and family relationships, among others.

Criteria for Director Independence

The Board considered all relevant facts and circumstances in making its determinations, including the following:

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Corporate Governance > Identification and Evaluation of Director Candidates

The above information was derived from Honeywell’s books and records and responses to questionnaires completed by the director nominees in connection with the preparation of this proxy statement.

IDENTIFICATION AND EVALUATION OF DIRECTOR CANDIDATES

The Corporate Governance and Responsibility Committee (“CGRC”) also serves as the Board’s Nominating Committee. The CGRC consists entirely of independent directors under applicable SEC rules and NYSE listing standards. The composition of the Board, as well as the perspective and skills of its individual members, needs to effectively support Honeywell’s growth and commercial strategy. Collectively, the Board must also be capable of overseeing risk management, capital allocation and leadership succession. Board composition and the members’ perspective and skills should evolve at an appropriate pace to meet the challenges of Honeywell’s changing commercial and strategic goals. The identification and evaluation of director candidates is an essential part of this evolutionary process.

The CGRC has primary responsibility for identification and evaluation of director candidates. In addition, included among the Honeywell Lead Director’s duties is the responsibility of working with the CEO, Chairman, CGRC and the full Board to help identify and prioritize the specific skill sets, experience, and knowledge that director candidates must possess. Potential director candidates meeting the criteria established by the CGRC and Lead Director are then identified either by reputation, existing Board members or shareowners. Director candidates are principally identified and evaluated in anticipation of upcoming director elections and other potential or expected Board vacancies.

The CGRC is also authorized, at the expense of Honeywell, to retain search firms to identify potential director candidates, as well as other external advisors, including for purposes of performing background reviews of potential candidates. Search firms retained by the CGRC shall be provided guidance as to the particular experience, skills or other characteristics that the Board is then seeking. The CGRC may delegate responsibility for day-to-day management and oversight of a search firm engagement to the Chairman of the Board and/or the Honeywell’s Senior Vice President—Human Resources, Procurement and Communications.

Candidates are interviewed multiple times by the Chairman, CEO, Lead Director and other members of the Board to ensure that candidates not only possess the requisites skills and characteristics but also the personality, leadership traits, work ethic, and independence of thought to effectively contribute as a member of the Board.

In addition to the specific criteria and priorities developed collectively, director candidates are considered by the CGRC in light of a range of more general criteria:

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Corporate Governance > Director Orientation and Continuing Education

While Honeywell’s Corporate Governance Guidelines do not prescribe diversity standards, as a matter of practice, the CGRC considers diversity in the context of the Board as a whole and takes into account the personal characteristics (gender, ethnicity, age) and experience (industry, professional, public service) of current and prospective directors to facilitate Board deliberations that reflect a broad range of perspectives.

After this process, the Board nominates the successful candidate for election to the Board at the Annual Meeting of Shareowners. From time to time, the Board fills vacancies in its membership, using the same process described above, which arise between annual meetings of shareowners.

To ensure that the Board continues to evolve and be refreshed in a manner that serves the changing business and strategic needs of Honeywell, before recommending for re-nomination a slate of incumbent directors for an additional term, the CGRC evaluates whether incumbent Directors possess the requisite skills and perspective, both individually and collectively. This evaluation is based primarily on the results of the annual review it performs with the Board of the requisite skills and characteristics of Board members, as well as the composition of the Board as a whole, and the results of the Board’s annual self-evaluation.

This year, one director, Duncan B. Angove, is nominated for election to the Board of Directors who has not previously stood for election to the Board by the shareowners. Mr. Angove was identified by a third-party search firm and was elected to the Board, effective February 14, 2018.

Shareowners wishing to recommend a director candidate to the CGRC for its consideration should write to the CGRC, in care of Vice President and Corporate Secretary, Honeywell, 115 Tabor Road, Morris Plains, New Jersey 07950. To receive meaningful consideration, a recommendation should include the candidate’s name, biographical data, and a description of his or her qualifications in light of the above criteria. Shareowners wishing to nominate a director should follow the procedures set forth in the Company’s By-laws and described under “Director Nominations” on page 92 of this proxy statement.

Honeywell did not receive any recommendation of a director candidate from a shareowner, or group of shareowners, that beneficially owned more than 3% of Honeywell’s common stock (“Common Stock”) for at least three years as of the date of recommendation.

OUR COMMITMENT TO BOARD DIVERSITY   While Honeywell’s Corporate Governance Guidelines do not prescribe a diversity policy or standards, as a matter of practice, the CGRC is committed to enhancing both the diversity of the Board itself and the perspectives and values that are discussed in Board and Committee meetings. Our current Board composition reflects this approach and the Board’s commitment to diversity.

BOARD TENURE   We believe that electing directors with a mix of tenures facilitates effective Board oversight. Hence, careful consideration is made to achieve the appropriate balance. Directors with many years of service to Honeywell provide the Board with a deep knowledge of our Company, while newer directors lend fresh perspectives.

DIRECTOR ORIENTATION AND CONTINUING EDUCATION

As part of Honeywell’s director orientation program, new directors participate in one-on-one introductory meetings with Honeywell business and functional leaders and are given presentations by members of senior management on Honeywell’s strategic plans, financial statements and key issues, policies and practices. Directors may enroll in director continuing education programs at Honeywell’s expense on corporate governance and critical issues associated with a director’s service on a public company board. Our senior management meets regularly with the Board and meets annually to review with the Board the operating plan of the Company and each of our SBGs. The Board also periodically participates in site visits to Honeywell’s facilities.

DIRECTOR ATTENDANCE AT ANNUAL MEETINGS

Honeywell has no specific policy regarding director attendance at its Annual Meeting of Shareowners. Generally, however, Board and Committee meetings are held immediately preceding and following the Annual Meeting of Shareowners, with directors attending the Annual Meeting. All of the directors attended last year’s Annual Meeting of Shareowners.

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