4/25/2022

Total reported compensation for Honeywell Chairman and CEO Darius Adamczyk was $26,100,120­­ a significant increase from the prior year. It included $4,754,160 in “the incremental fair value from a pandemic-related modification to the financial metrics for the 2020-2022 PSU awards.” In February 2022, the Management Development and Compensation Committee (MDCC) made adjustments to the weighting applied to the metrics under the plan the 2019-2021 cycle.

ISS has already recommended against the advisory vote on compensation at the company based on these adjustments to performance share units. In 2021, shareholders widely condemned changed goalposts blamed on COVID, leading to some of the lowest levels of support seen in the history of shareholder votes on pay. This is the first proxy statement I’ve seen this year that took such action recently, and the most mentions I’ve seen of the word COVID: 42.

Here’s how the company describes what they did: “The original financial goals remained in the calculation to preserve the integrity of the program, but their weighting was reduced from 75% to 50%, to recognize that the pandemic impacts were not contemplated when the goals were originally established, and that the results were adversely and materially impacted by global market forces. The weight applied to the three-year Relative TSR goal was increased from 25% to 50%, to better align with the shareowner experience.” A closer look shows that essentially those items that would have negatively affected pay were weighed as less valuable, and those that increased pay were given extra power. Actual plan performance was below threshold in two of four metric categories, yet the MDCC opted to award at 87 percent.

“These decisions are within the MDCC’s authority” – well yes, of course they are. All compensation decisions are within the authority of the compensation committees. That in no way negates the right and obligation of shareholders to vote on these decisions, and in this case many will vote against.