(LOGO)
Dear Fellow Shareowner:
You are cordially invited to attend our 1994 Annual Meeting of Shareowners
of United Technologies Corporation to be held April 18 at Sikorsky Aircraft,
Stratford, Connecticut. The doors will open at 10:30 a.m. and the meeting will
begin at 11:00 a.m.
At the meeting, we will report on the operations, progress and plans of the
Corporation, and give you an opportunity to ask questions. If you are unable to
attend, you may read a summary of the annual meeting proceedings in the First
Quarter Report to Shareowners.
The annual meeting is open to all shareowners or their authorized
representatives. To attend the meeting, complete and return the enclosed
postage-paid reservation card directly to the Corporation. An admission ticket
will be mailed to you.
If your shares are held of record by a broker or other nominee in street
name and you wish to attend the meeting, your broker or nominee must give
written notice to the Corporation that you are its authorized representative for
those shares.
Your vote is important, and we urge you to execute and return the proxy
card in the envelope provided whether or not you plan to attend the meeting. If
you decide to attend the annual meeting, you can still vote your shares in
person, if you wish.
We hope to see you on April 18th.
ROBERT F. DANIELL
Chairman and
Chief Executive Officer
GEORGE DAVID
President and
Chief Operating Officer
Hartford, Connecticut
March 11, 1994
PAGE
TABLE OF CONTENTS
Page
Notice of Annual Meeting 1
Proxy Statement 2
General Information 2
Item No. 1 - Election of Directors 4
Information about Nominees for Directors 4
Compensation 8
Report of the Committee on Compensation and Executive Development 14
Item No. 2 - Appointment of General Auditor 19
Item No. 3 - Shareowner Proposal regarding Executive Compensation 20
Item No. 4 - Shareowner Proposal regarding Employment in Northern Ireland 21
Item No. 5 - Shareowner Proposal regarding Foreign Military Sales 23
Item No. 6 - Shareowner Proposal regarding a Code of Conduct for Business
in South Africa 24
Other Business 26
Proxies and Voting 26
Annual Report 28
PAGE
NOTICE OF ANNUAL MEETING
April 18, 1994
To the Owners of Common and Preferred Stock:
The Annual Meeting of Shareowners of United Technologies Corporation will
be held at Sikorsky Aircraft, 6900 Main Street, Stratford, Connecticut at 11:00
a.m. on Monday, April 18, 1994 to consider and take action on the following
items:
1. Election of eleven Directors.
2. Appointment of General Auditor.
3. A shareowner proposal regarding Executive Compensation.
4. A shareowner proposal regarding Employment in Northern Ireland.
5. A shareowner proposal regarding Foreign Military Sales.
6. A shareowner proposal regarding a Code of Conduct for Business in
South Africa.
7. Such other business as may properly come before the meeting or any
adjournment thereof.
Only owners of Common and Series A ESOP Convertible Preferred Stock of
record at the close of business on March 1, 1994 are entitled to notice of and
to vote at the meeting. A list of such shareowners will be available at the
time and place of the meeting and during the ten days prior to the meeting at
the office of the Vice President-Contracts and Counsel of Sikorsky Aircraft,
6900 Main Street, Stratford, Connecticut.
We urge you to sign and date the enclosed proxy card and return it at once
in the enclosed envelope.
William H. Trachsel
Vice President and Secretary
March 11, 1994
PAGE
PROXY STATEMENT
This Proxy Statement is first being mailed to shareowners on or about March
11, 1994 soliciting proxies by the Board of Directors of United Technologies
Corporation, One Financial Plaza, Hartford, Connecticut 06101, for the Annual
Meeting of Shareowners of the Corporation to be held on Monday, April 18, 1994,
at the time and place and for the purposes set forth in the Notice of Annual
Meeting.
Record Date and Outstanding Shares
The record date for determining those shareowners entitled to vote at the
annual meeting was March 1, 1994. At that date, the Corporation had outstanding
139,404,675 shares of stock consisting of 126,978,215 shares of Common Stock and
12,426,460 shares of Series A ESOP Convertible Preferred Stock. Each share of
Common is entitled to one vote. Each share of Series A ESOP Preferred is
entitled to 1.3 votes. The total number of votes entitled to be cast at the
meeting is 143,132,613.
The Capital Group, Inc., 333 South Hope Street, Los Angeles, CA 90071, has
advised the Corporation that certain of its operating subsidiaries exercised
investment discretion over various institutional accounts which held as of
December 31, 1993, 8.85% or 11,058,470 shares of the Corporation's issued and
outstanding Common Stock. The Capital Group has represented that these shares
are held solely for investment purposes and that no managed account holds more
than 5% of the Corporation's Common Stock. The Capital Group has sole voting
power with respect to 1,320,570 shares and sole investment power with respect to
all shares.
The Corporation knows of no other person who is the beneficial owner of
over 5% of its Common Stock. All Series A ESOP Preferred is held by a trustee
on behalf of employees of the Corporation who participate in the Corporation's
Employee Savings Plan.
Cumulative Voting
All shares of the Corporation are entitled, without distinction as to
class, to vote at the annual meeting on any matter coming before the meeting.
In the election of directors of the Corporation, each owner of Common Stock is
entitled to as many votes as equal the number of shares of his or her stock
multiplied by the number of directors to be elected. The owners of the Series A
ESOP Preferred, when voting for the election of directors, are entitled to as
many votes as equal 1.3 times the number of shares of stock multiplied by the
number of directors to be elected. By giving written instructions to the
Corporation, shareowners may cast all such votes for a single director or may
distribute such votes among the number of directors to be elected, or any two or
more, as they see fit. If no written indication is made, the votes will be
evenly distributed among all the management nominees. A shareowner may withhold
a vote for a particular management nominee by writing the nominee's name on the
proxy card in the space provided. Under those circumstances, unless other
instructions are given in writing, the shareowner's votes will then be evenly
cast among the remaining management nominees.
GENERAL INFORMATION
Board of Directors--Directors are elected annually by the shareowners.
Nominees are selected by the Board upon recommendation of its Nominating
Committee and are chosen for their ability and integrity. As a group, they are
expected to bring to the Board experience in national and international business
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matters, an awareness of the appropriate role of the Corporation in society and
a diversity of opinion and insight. The Board met nine times during 1993 with
an average attendance of 93%. All nominees attended more than 75% of the
aggregate meetings of the Board and the Committees on which he or she served.
The Board has established six permanent committees to assist it in the discharge
of its responsibilities.
Executive Committee--The Executive Committee may exercise all powers of the
Board of Directors in the management of the Corporation except those powers that
the Bylaws specifically reserve to the entire Board (e.g., amend the Bylaws,
declare dividends). Although the Executive Committee has very broad powers, in
practice it meets only when it would be inconvenient to call a meeting of the
Board. The members of the Executive Committee, which met three times during
1993, are Robert F. Daniell, Chairman; Antonia Handler Chayes, George David,
Robert H. Malott, and Jacqueline G. Wexler.
Audit Review Committee--The Audit Review Committee recommends to the Board
a nominee for General Auditor of the Corporation, approves services rendered by
and meets with the General Auditor and with the Corporation's internal auditors
to receive reports with regard to all auditing matters. The members of the
Audit Review Committee, which met five times during 1993, are Howard H. Baker,
Jr., Chairman; Antonia Handler Chayes, Robert F. Dee, Pehr G. Gyllenhammar,
Robert H. Malott, and Jacqueline G. Wexler.
Committee on Compensation and Executive Development--The Committee on
Compensation and Executive Development makes recommendations to the Board on
compensation actions involving senior executives of the Corporation. The
Committee approves compensation actions involving all other elected officers of
the Corporation, and periodically reviews in the aggregate, annual salaries of
all executives. The Committee approves long term incentive awards for elected
officers and certain key executives of the Corporation, and reviews and
administers the incentive compensation, long term incentive and other
compensation plans of the Corporation. It also reviews and makes
recommendations to the Board on policies and programs for the development of
management personnel and management structure and organization. The members of
the Committee on Compensation and Executive Development, which met nine times
during 1993, are Robert F. Dee, Chairman; Howard H. Baker, Jr., Charles W.
Duncan, Jr., and Jacqueline G. Wexler.
Finance Committee--The Finance Committee is responsible for reviewing and
making recommendations to the Board on the management of the financial resources
of the Corporation. This Committee also reviews such major financial strategies
and transactions and major acquisitions and divestitures as may be referred to
it by the Chief Executive Officer of the Corporation. The members of the
Finance Committee, which met five times during 1993, are Charles W. Duncan, Jr.,
Chairman; Robert F. Daniell, George David, Pehr G. Gyllenhammar, Gerald D.
Hines, and Robert H. Malott.
Nominating Committee--The Nominating Committee is responsible for making
recommendations to the Board on candidates for the Board and on the
qualifications and retirement of existing members of the Board. This Committee
also is responsible for other matters referred to it by the Board. The
Nominating Committee considers nominees recommended to it in writing by
shareowners. The members of the Nominating Committee, which met two times
during 1993, are Robert H. Malott, Chairman; Robert F. Dee and Charles W.
Duncan, Jr.
Public Issues Review Committee--The Public Issues Review Committee has
oversight responsibility for the Corporation's response to such public issues as
equal employment opportunity, the environment and safety in the workplace. In
addition, the Committee has oversight responsibility for the Corporation's
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contributions program and political action committees. The members of the
Public Issues Review Committee, which met six times during 1993, are Jacqueline
G. Wexler, Chairman; Howard H. Baker, Jr., Antonia Handler Chayes, Robert F.
Dee, Pehr G. Gyllenhammar, and Gerald D. Hines.
ITEM NO. 1
ELECTION OF DIRECTORS
Board of Directors Nominees
Ten of the nominees were elected directors at the 1993 Annual Meeting. Mr.
Lee was elected a director in January 1994.
Should any of these nominees become unavailable to accept nomination or
election as a director, the proxy holders will, at their discretion, vote the
shares that they represent for the election of such other persons as the Board
of Directors may recommend, unless the Board reduces the number of directors.
Information regarding each nominee, including their ownership of Common and
Series A ESOP Preferred Stock of the Corporation as of February 1, 1994, is
presented below:
HOWARD H. BAKER, JR., Partner, Baker, Worthington, Crossley, Stansberry &
Woolf (attorneys). Senator Baker was a member of the United States Senate
from 1967 through 1984, where he served two terms as Minority Leader and
two terms as Majority Leader. He was the Chief of Staff for the President
from February 1987 to July 1988. Senator Baker is a director of Federal
Express Corporation, Waste Management, Inc. and Pennzoil Company, and a
trustee of the Mayo Clinic. He is 68 and has been a director since 1990.
ANTONIA HANDLER CHAYES, President of the Consensus Building Institute and
Senior Consultant to Endispute Incorporated, Boston, Massachusetts
(conflict prevention and alternative dispute resolution). Ms. Chayes
served as Assistant Secretary of the United States Air Force from 1977 to
1979, and as Under Secretary from 1979 to 1981. She is a member of the
DOD-CIA Joint Security Commission. She teaches at the Kennedy School of
Government and is Co-Director of the Compliance Project of the Program on
Negotiation at the Harvard Law School. She is a member of the American Law
Institute and the Council on Foreign Relations. Ms. Chayes also sits on
the Advisory Board of the Columbia University School of International and
Public Affairs. She is 64 and has been a director of the Corporation since
1981.
ROBERT F. DANIELL, Chairman and Chief Executive Officer, United
Technologies Corporation. Mr. Daniell served as President of Sikorsky
Aircraft from 1981 to 1983, and Vice President of United Technologies from
1982 to 1983. He was elected Senior Vice President - Defense Systems in
1983. Mr. Daniell was elected President and Chief Operating Officer in
1984 and named to the additional post of Chief Executive Officer, effective
January 1, 1986. He was elected Chairman, effective January 1, 1987. Mr.
Daniell relinquished the offices of President and Chief Operating Officer
in February 1992 upon the election of Mr. George David to those posts. Mr.
Daniell is a director of Shell Oil Co. and The Travelers Inc. He is 60 and
has been a director of the Corporation since 1984.
GEORGE DAVID, President and Chief Operating Officer, United Technologies
Corporation. Mr. David served as President and Chief Executive Officer of
Otis Elevator Company from 1986 through 1988, and as Chairman of Otis from
1987 through today. He was elected to the office of Senior Vice President
of the Corporation in 1988, and Executive Vice President and President,
Commercial/Industrial in 1989. In February 1992, Mr. David was elected
President and Chief Operating Officer of the Corporation. Mr. David is a
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director of Northeast Utilities and a trustee of the Graduate School of
Business Administration at The University of Virginia. He is 51 and has
been a director of the Corporation since 1992.
ROBERT F. DEE, retired Chairman of the Board, SmithKline Beckman
Corporation, Philadelphia, Pennsylvania (pharmaceuticals). Mr. Dee served
as Chief Executive Officer of SmithKline Beckman Corporation from 1972 to
1982. He is a director of Air Products and Chemicals, Inc., Health Trust,
Inc., Kabi Pharmacia and Volvo North America Corporation. He is a member
of The Business Council, The Conference Board and the Management
Executives' Society and serves on the Board of Trustees of The Eisenhower
Exchange Fellowship. He is 69 and has been a director of the Corporation
since 1981.
CHARLES W. DUNCAN, JR., Private Investor, Houston, Texas. Mr. Duncan has
been involved in private investments since 1981. Mr. Duncan served as
Secretary of the United States Department of Energy from 1979 to 1981. He
is a director of American Express Company, American Express Bank, Ltd., The
Coca-Cola Company, Newfield Exploration Co., Chemical Banking Corporation,
Panhandle Eastern Corporation and Texas Commerce Bancshares, Inc. Mr.
Duncan is 67 and has been a director of the Corporation since 1981.
PEHR G. GYLLENHAMMAR, former Executive Chairman, AB Volvo, Goteborg,
Sweden. Mr. Gyllenhammar served as Managing Director and Chief Executive
Officer of AB Volvo, from 1971 to 1983, as Chairman and Chief Executive
Officer until 1990, and as Executive Chairman from 1990 to December 1993.
He is a director of Kissinger Associates, Inc., Pearson plc., Reuters
Holdings plc., and Philips Electronics NV. Mr. Gyllenhammar is also a
director and Chairman of Swedish Ships' Mortgage Bank and director and Vice
Chairman of Skandinaviska Enskilda Banken. Mr. Gyllenhammar is 58 and has
been a director of the Corporation since 1981.
GERALD D. HINES, Founder and Chairman of Hines Interests Limited
Partnership, an international real estate development and management firm,
in Houston, Texas. Mr. Hines served on the Board of the Federal Reserve
Bank of Dallas from 1975 through 1983, and held the office of Chairman of
the Federal Reserve Bank of Dallas from 1981 through 1983. He is a trustee
of the Urban Land Institute, and is a director of the Urban Land Research
Foundation. Mr. Hines is 68 and has been a director of the Corporation
since 1989.
CHARLES R. LEE, Chairman and Chief Executive Officer of GTE Corporation,
Stamford, Connecticut (telecommunications). Mr. Lee has served since 1992
as Chairman and Chief Executive Officer of GTE. Since joining GTE in 1983,
Mr. Lee served as Senior Vice President of Finance from 1983 to 1986,
Senior Vice President Finance and Planning from 1986 to 1988, and from 1988
to 1992 he served as President, Chief Operating Officer and a director of
GTE. He is a director of Contel Cellular Inc., the Proctor & Gamble
Company and USX Corporation. He is a member of the Business Roundtable, a
Trustee Fellow of the Board of Trustees of Cornell University Council, a
Trustee of the National Planning Association and Chairman of the New
American Realities Committee of the National Planning Association, a member
of The Conference Board, Harvard Business School's Board of Directors of
the Associates, and a director the Stamford Hospital Foundation. He is 54
and has been a director of the Corporation since 1994.
ROBERT H. MALOTT, Chairman of the Executive Committee and former Chairman
of the Board and Chief Executive Officer, FMC Corporation, Chicago,
Illinois (manufacturer of machinery and chemicals). He is on the Board of
FMC Corporation, Amoco Corporation, Rubatex Corporation, and the Swiss Bank
Corporation (Council of International Advisors). He is on the Board of the
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National Museum of Natural History (Chairman), National Park Foundation,
The Aspen Institute, the Lyric Opera of Chicago, American Enterprise
Institute, the Hoover Institution, Argonne National Laboratory, The
Business Council, the University of Chicago, and the Illinois Business
Roundtable (Policy Committee). Mr. Malott is 67 and has been a director of
the Corporation since 1980.
JACQUELINE G. WEXLER retired as President of the National Conference of
Christians and Jews, New York, New York, on December 31, 1990. Mrs. Wexler
is a former President of Hunter College of the City University of New York.
Mrs. Wexler joined Academic Consulting Associates as a Senior Associate in
1980 and was named President the same year. Mrs. Wexler served in that
capacity until 1982. She is a director of Interpublic Group of Companies,
Incorporated. Mrs. Wexler is 67 and has been a director of the Corporation
since 1978.
At February 1, 1994, no director or officer owned or had the right to
acquire under employee stock options exercisable on or prior to April 1, 1994,
more than 1% of the Common Stock of the Corporation. Directors and officers as
a group owned or had the right to acquire under employee stock options
exercisable on or before April 1, 1994, 1.5% of the Common Stock of the
Corporation.
The following table lists all stock based holdings at February 1, 1994 for
the five most highly compensated executive officers and the Directors of the
Corporation. The address for each individual in this table is United
Technologies Corporation, One Financial Plaza, Hartford, CT 06101.
Security Ownership of Directors and Executive Officers
Class of Shares
Name Securities Beneficially Total (2)
Owned (1)
Howard H. Baker, Jr. Common 2,000 2,250
Antonia Handler Common 1,850 1,850
Chayes
Robert F. Daniell Common 596,245 781,541
Series A ESOP 486 486
Preferred
George David Common 346,491 520,460
Series A ESOP 471 471
Preferred
Robert F. Dee Common 1,400 1,650
Charles W. Duncan, Common 10,400 (3) 10,650
Jr.
Pehr G. Gyllenhammar Common 200 450
Gerald D. Hines Common 5,250 5,250
Charles R. Lee Common 1,225 1,225
Robert H. Malott Common 1,400 1,650
Jacqueline G. Wexler Common 1,650 1,650
Karl J. Krapek Common 141,550 237,010
Series A ESOP 482 482
Preferred
Stephen F. Page Common 17,980 64,806
Series A ESOP 0 0
Preferred
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Irving B. Yoskowitz Common 166,338 185,316
Series A ESOP 487 487
Preferred
Directors & Common 2,166,126 2,909,659
Executive Series A ESOP 7,953 7,953
Officers as a Group Preferred
(31)
_________
(1) Included in the number of shares beneficially owned by Messrs.
Daniell, David, Krapek, Page, and Yoskowitz and all directors and executive
officers as a group are 484,474, 278,186, 103,251, 6,384, 124,684, and 1,664,526
shares, respectively, which such persons have the right to acquire by April 1,
1994 pursuant to employee stock options; 80,346, 36,172, 15,264, 2,500, 18,744,
and 247,642 shares, respectively, as to which such persons have sole voting and
investment powers; and, 31,425, 32,133, 23,035, 9,096, 22,880 and 246,952
shares, respectively, as to which such persons have sole voting but no
investment powers. Executive officers as a group have shared voting and
investment power with respect to 3,006 shares of Common Stock and 7,953 shares
of Series A ESOP Preferred Stock. The following directors have sole voting but
no investment powers with respect to the following number of shares: Ms.
Chayes, Mrs. Wexler, Messrs. Baker, Hines, Lee, and Malott - 1000 shares; Mr.
Dee - 800 shares. These directors, as well as Mr. Gyllenhammar, have sole
voting and investment power with respect to the balance of their holdings of
Common Stock.
(2) This column shows the individual's stock based holdings, including the
equity securities in the Securities Beneficially Owned column and described in
footnote (1). The value of these holdings will increase or decrease with the
price of the Corporation's stock. The figures also include, as appropriate,
stock options that are not exercisable within sixty days, deferred stock units
of executives who elect to defer a portion of compensation in the UTC Stock Unit
Account under the Deferred Compensation Program, and directors deferred stock
units which will be converted to Common Stock of the Corporation upon a
director's termination of board service as to all of which there is no voting or
investment power.
(3) Includes 5,400 shares owned directly by Mr. Duncan as to which he has
sole voting and investment powers; 4,000 shares owned by a partnership in which
Mr. Duncan is both a Limited Partner and a General Partner, as to which he has
shared voting and investment powers; and 1,000 shares as to which he has sole
voting but no investment powers.
Certain Transactions
The law firm of Baker, Worthington, Crossley, Stansberry & Woolf, of which
Senator Baker is a partner, is retained from time to time for legal services.
The Corporation and its subsidiaries have transactions in the ordinary
course of business with other unaffiliated corporations of which certain of the
non-employee directors are officers or directors. The Corporation does not
consider the amounts involved in such transactions material in relation to its
business and believes that such amounts are not material in relation to the
businesses of such other corporations or the interests of the directors
involved.
Shareowner Nominations
Pursuant to the Corporation's Bylaws, shareowners who contemplate making
nominations for director shall submit such nominations in writing to the
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Secretary of the Corporation at least 30 days and not more than 60 days prior to
the annual meeting. The notice shall set forth as to the nominee, all
information relating to the nominee that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(including the nominee's written consent to being a nominee and to serving if
elected). As to the shareowner giving the notice, the Bylaws require that the
notice shall include the shareowner's name and address as they appear on the
Corporation's books and records, and the class and number of shares of the
Corporation beneficially owned by such shareowner.
COMPENSATION
Compensation of Directors
Fees and other benefits are provided to directors who are not employees of
the Corporation. The aggregate amount of directors' fees paid for the fiscal
year ended December 31, 1993 was $515,833. No fees or other benefits are
provided to employees of the Corporation for serving as directors. Fees paid to
non-employee directors consist of a basic annual retainer of $25,000, additional
retainers of $3,000 for each Committee chairmanship and $2,500 for each
Committee membership, and a fee of $1,000 for each Board and Committee meeting
attended. Beginning with calendar year 1994, sixty percent of each non-employee
director's basic annual retainer is paid, at the election of such director,
either in shares of Common Stock of the Corporation or in deferred stock units
which automatically convert to shares of Common Stock upon termination of
service on the Board.
Under the Directors' Deferred Compensation Plan, non-employee directors may
make an irrevocable election each year to defer receipt of all or a portion of
the following year's annual retainer and fees that would be paid in cash. This
deferred remuneration is assumed to have been invested at a rate that is at
least equal to the rate being paid from time to time on the income fund under
the Corporation's Savings Plan. Participants receive payment from their account
in cash in one or more annual installments following termination of service as a
director. One non-employee director is participating in the Directors' Deferred
Compensation Plan.
As part of a program intended to promote a closer identity between
shareowners and the Board, non-employee directors receive a one-time grant of
United Technologies Corporation restricted Common Stock equal to 200 shares for
each year of service remaining between the grant date and their scheduled
retirement date, but in no case exceeding 1,000 shares per director. The shares
vest in increments of 200 shares on the date of each Annual Meeting of
Shareowners, but will not be transferred to the director until such director
retires or resigns from the Board. Should the director leave the Board before
all restricted shares vest, the non-vested shares will be forfeited except that
in the event of the death or disability of the director, a change in control, or
when a director retires or resigns to accept full time employment with a
charity, a not-for-profit institution or the state, federal or local government,
all shares not previously vested, are entitled to accelerated vesting. In lieu
of Common Stock, any foreign national who serves as a director is eligible to
receive a one-time grant of restricted share units, each unit being equal in
value to a share of Common Stock. Vesting provisions for units are the same as
restricted stock. At retirement, a cash payment equal to the then-current value
of a share of Common Stock will be paid to the foreign director for each vested
unit. Each unit and share of restricted stock will, on a quarterly basis,
generate a cash payment equal to the dividend paid on a share of Common Stock.
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SUMMARY COMPENSATION TABLE
Annual Compensation
Other Annual
Name and Salary Bonus (1) Compensation(2)
Principal Position Year ($) ($) ($)
R. Daniell, Chairman and 1993 $962,500 $800,000 $138,488
Chief Executive Officer 1992 $879,167 $0 $132,209
1991 $816,250 $350,000 -
G. David, President and 1993 $770,833 $600,000 $108,532
Chief Operating Officer 1992 $603,854 $0 $84,596
1991 $438,750 $225,000 -
K. Krapek, President 1993 $533,333 $300,000 -
Pratt & Whitney 1992 $360,000 $225,000 -
1991 $330,000 $190,000 -
I. Yoskowitz, Executive 1993 $450,000 $285,000 $66,697
Vice President and 1992 $404,167 $180,000 $59,877
General Counsel 1991 $340,420 $180,000 -
S. Page, Executive Vice 1993 $410,511 $385,000 $177,904
President and Chief
Financial Officer
8a
SUMMARY COMPENSATION TABLE
Long Term Compensation
Awards
Payouts
Securities
Name and Restricted Underlying Long Term All Other
Principal Position Stock Awards Options Incentive Compensation
Year (3,4) (#) Payouts (5)
($) ($) ($)
R. Daniell, Chairman and 1993 $0 25,000 $885,368 $77,453
Chief Executive Officer 1992 $634,375 (6) 150,000 $411,172 $65,985
1991 $816,000 (7) 16,000 $372,600 -
G. David, President and 1993 $0 20,000 $771,431 $25,566
Chief Operating Officer 1992 $1,015,000 (6) 120,000 $285,686 $21,365
1991 $0 17,500 $407,531
K. Krapek, President 1993 $0 12,000 $674,785 $16,879
Pratt & Whitney 1992 $822,850 (8) 87,000 $294,239 $24,080
1991 $0 10,000 $253,125
I. Yoskowitz, Executive 1993 $111,875 (9) 8,500 $341,953 $17,304
Vice President and 1992 $1,141,875 (6) 8,500 $111,741 $14,652
General Counsel 1991 $0 8,500 $197,944 -
S. Page, Executive Vice 1993 $473,750 (9) 37,000 $212,667 $41,875
President and Chief
Financial Officer
8b
Under the Directors' Retirement Plan, a non-employee director who served as
a director for five or more years receives an annual retirement benefit equal to
the highest annual Board retainer in effect for directors of the Corporation
during the director's years of service. The benefit is payable for a period
equal to the director's years of service or 15 years, whichever is shorter.
Compensation of Executive Officers
The following Summary Compensation Table sets forth for each of the fiscal
years in the three year period ended December 31, 1993, the compensation for
services in all capacities earned by each of the Corporation's Chairman and
Chief Executive Officer and the other four most highly compensated (based on
total salary and bonus) executive officers of the Corporation and its
subsidiaries (the _named executive officers_) in 1993.
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(1) Incentive compensation shown in the Bonus column for Messrs. David,
Daniell, Krapek, Page and Yoskowitz was paid under the Annual Executive
Incentive Compensation Plan. For 1993, $8,406,075 was the aggregate amount set
aside under this Plan with respect to the Corporate Fund. The figure for Mr.
Page also includes a one time sign-on bonus which he received in January 1993.
(2) Pursuant to SEC rules, no figures are required to be reported in this
column for 1991. For other years, pursuant to SEC rules and where appropriate,
no amounts for executive perquisites and other personal benefits are shown
because the aggregate dollar amount per executive is less than either $50,000 or
10% of annual salary and bonus. Further, SEC rules require that each perquisite
or other personal benefit exceeding 25% of the total Other Annual Compensation
reported for an individual in this column be specifically identified. In 1993
such amounts include: Mr. David - $33,707 for personal use of corporate
aircraft for security reasons; Mr. Page - $75,000 and $47,369, respectively, as
a one time moving allowance and associated tax gross-up. For 1993 and 1992
amounts reported under Other Annual Compensation include non-preferential
dividends paid on non-vested performance-based restricted stock.
(3) Consists of shares of restricted stock that vest solely on the basis
of the lapse of time valued at the market price of the Common Stock as of the
date of grant. Restricted stock awards with performance-based vesting criteria
are described below in the table on Long Term Incentive Plans - Awards in Last
Fiscal Year. The shares of restricted stock awarded in 1992 and 1993 are
accompanied by a _tandem tax offset unit_ which entitles the holder, upon
vesting, to elect to surrender a number of shares sufficient to satisfy the
corresponding tax withholding obligations. Regular quarterly dividends are paid
on all shares of restricted stock.
(4) At the close of business on December 31, 1993, the following named
executives held total non-vested time based and/or performance-based restricted
shares as follows: Mr. Daniell - 17,500 shares valued at $1,085,000; Mr. David
- - 20,000 shares valued at $1,240,000; Mr. Krapek - 14,650 shares valued at
$908,300; Mr. Yoskowitz - 17,500 shares valued at $1,085,000; and, Mr. Page -
10,000 shares valued at $620,000. The foregoing values were calculated by
multiplying the closing market price of the Common Stock on December 31, 1993,
by the number of shares held.
(5) For 1993, consists of employer matching contributions in the Employee
Savings Plan for Messrs. Daniell, David, Krapek, Yoskowitz and Page of $7,075,
$6,125, $7,075, $7,075, and $0, respectively, and life insurance premium
payments of $70,378, $19,441, $9,804, $10,229, and $41,875, respectively.
(6) Consists of 1992 grants of time based restricted stock to Messrs.
Daniell, David and Yoskowitz of 12,500, 20,000 and 22,500 shares, respectively.
All shares held by Messrs. Daniell and David and 15,000 shares held by Mr.
Yoskowitz vested on December 31, 1992. 7,500 shares held by Mr. Yoskowitz are
scheduled to vest on December 31, 1994.
(7) On February 25, 1991, Mr. Daniell was granted 17,000 time based
restricted shares which vested on October 31, 1993.
(8) Consists of a grant of 16,700 shares of time based restricted stock to
Mr. Krapek. 6,250 of these shares vested on December 31, 1992. 6,250 are
scheduled to vest on December 31, 1994. 4,200 performance-based restricted
shares were converted in 1992 to a time based award with vesting scheduled to
occur September 1, 1995. This change was made because the original performance-
based vesting criteria applied to Carrier Corporation and are no longer
applicable to Mr. Krapek in his current position as President of Pratt &
Whitney.
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(9) Consists of 1993 grants of time based restricted stock to Messrs.
Yoskowitz and Page of 2,500 and 10,000 respectively. These 2,500 shares held
by Mr. Yoskowitz are scheduled to vest February 26, 1996. 2,500 of the shares
granted to Mr. Page vested after one year on January 14, 1994. The balance of
Mr. Page's shares are scheduled to vest in annual increments of 2,500 shares in
1995, 1996 and 1997.
The following table sets forth information concerning individual grants of
stock options made during the 1993 fiscal year to each named executive officer.
The Corporation did not grant any stock appreciation rights during the 1993
fiscal year and has no outstanding SAR's.
OPTION GRANTS IN
LAST FISCAL YEAR
Grant Date
Individual Grants (1) Present Value
Number of
Shares % of Total
Underlying Options Grant Date
Options Granted to Exercise Expiration Present
Name Granted (#) Employees Price Date Value (2)
($/SH)
R. 25,000 (3) 1.8% $44.75 1-31-03 $337,863
Daniell
G. David 20,000 (3) 1.4% $44.75 1-31-03 $270,290
K. Krapek 12,000 (3) 0.9% $44.75 1-31-03 $162,174
I.Yoskowi 8,500 (3) 0.6% $44.75 1-31-03 $114,873
tz
S. Page 12,000 (3) 0.9% $44.75 1-31-03 $162,174
25,000 (4) 1.8% $47.375 1-13-03 $357,681
(1) Under certain change of control situations or restructuring
conditions, the Board of Directors may accelerate vesting of option grants,
purchase an outstanding grant for the cash value thereof or provide other
adjustments or modifications to the outstanding grants. All stock options were
granted with an exercise price equal to the market price of the Common Stock on
the date of grant.
(2) The values listed in this column are based on the Black-Scholes option
pricing model. The estimated values are based on the following assumptions as
to variables: time period to exercise of ten years, interest rate of 7.0%,
stock price volatility of .2124, and future dividend yield of 3.0%. The
estimated values are not intended to forecast future appreciation, if any, of
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AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Shares Underlying Value of Unexercised In-the-
Unexercised Money
Options at FiscalYear End (#) Options at
Fiscal Year End ($) (1)
Shares Value (1)
Name Acquired on Realized ($) Exercisable Unexercisable Exercisable Unexercisable
Exercise (#)
R. Daniell 0 $0 484,474 135,296 $10,969,907 $1,583,856
G. David 6,768 $164,124 228,186 158,969 $3,741,832 $2,142,215
K. Krapek 1,122 $26,928 103,251 75,460 $1,770,521 $1,289,723
I. Yoskowitz 4,438 $100,650 124,684 3,978 $2,047,617 $68,621
S. Page 0 $0 6,384 30,616 $110,124 $462,501
11a
United Technologies' stock. If the Corporation's stock does not increase in
value above the exercise price of the stock option, then the option grants
described in the table will be valueless. There is no assurance that the value
realized by an executive will be at or near the value estimated by the Black-
Scholes model or any other valuation model applied to stock options.
(3) These options were granted on February 23, 1993, and were scheduled to
become exerciseable on February 1, 1996. The options were subject to early
vesting on February 1, 1994, in whole or in part, if Continuous Improvement
Incentive Program ("CIIP") objectives were achieved. Since the objectives were
achieved, certain options ( including options granted in prior years) vested on
February 1, 1994, as follows: Mr. Daniell - 24,915; Mr. David - 21,707; Mr.
Krapek - 12,000; Mr. Yoskowitz - 9,622; and, Mr. Page - 6,384. CIIP program
objectives consist of between two and four strategic or financial criteria that
are directly relevant to an operating unit executive's business unit. For
Messrs. Daniell, David, Page, and Yoskowitz, CIIP program objectives are: (i)
an average of the business units' achievements under the CIIP (50%); and, (ii)
the Corporation's success in meeting its return on equity objective (50%). If
accelerated vesting of options occurs as a result of achievement of CIIP program
objectives, a quarterly dividend equivalent payment equal to the regular
quarterly dividend paid on Common Stock will be paid with respect to each such
option. Such dividend equivalents will be paid for up to a maximum of two years
or the date the option is exercised, if sooner.
(4) These options were granted to Mr. Page on January 14, 1993 and will
become exercisable on January 14, 1996.
The following table sets forth information concerning the exercise of stock
options during the 1993 fiscal year by each of the named executive officers and
the fiscal year end value of unexercised options. No stock appreciation rights
were exercised in 1993 or held at fiscal year end.
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LONG TERM INCENTIVE PLANS -
AWARDS IN LAST FISCAL YEAR (1)
Estimated Future Payouts
under Non-Stock Price
Based Plans
Name No. of Shares, Performance or
Units Other Thresho Target Maximum
or Other Rights Period Until ld ($ or ($ or
(#) Maturation or ($ or #) #)
Payout #)
R. Daniell 12,500 2/1/93 - 2/1/94 0 12,500 12,500
G. David 10,000 2/1/93 - 2/1/94 0 10,000 10,000
K. Krapek 6,000 2/1/93 - 2/1/94 0 6,000 6,000
I. Yoskowitz 4,250 2/1/93 - 2/1/94 0 4,250 4,250
S. Page 6,000 2/1/93 - 2/1/94 0 6,000 6,000
12a
(1) The value reported is based either on the closing price on the New
York Stock Exchange on the date of exercise or on December 31, 1993, as
applicable, minus the exercise price.
The following table sets forth information concerning individual grants of
Long Term Incentive Plan awards made during the 1993 fiscal year to each of the
named executives.
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(1) These awards are made under the United Technologies Corporation Long
Term Incentive Plan (the _LTIP_) which was approved by the shareowners in 1989.
All the 1993 awards are performance-based and subject to forfeiture if
established goals are not achieved. The awards consist of Restricted Share
Units (_RSUs_) which vest if _Continuous Improvement Incentive Program_ (_CIIP_)
objectives are achieved. Since the CIIP objectives were achieved, certain of
the awards (including RSUs awarded in prior years) vested on February 1, 1994,
as follows: Mr. Daniell - 12,457; Mr. David - 10,854; Mr. Krapek - 6,000; Mr.
Yoskowitz - 4,811; and, Mr. Page - 3,192. 50% of any RSUs that vest will be
settled in shares of Common Stock. These shares will continue to be subject to
a restriction on transferability until such time as the participant terminates
employment with the Corporation. The other 50% of any vested RSUs will be
settled in cash, reduced by an amount sufficient to fund the total tax
withholding obligation resulting from the vesting of the RSUs. For a
description of the CIIP objectives, see footnote 3 to the table entitled Option
Grants in the Last Fiscal Year, above.
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COMMITTEE ON COMPENSATION AND EXECUTIVE DEVELOPMENT REPORT
Introduction
The following report is provided by the Board of Directors' Committee on
Compensation and Executive Development (the "Committee"). The Committee
supervises the Corporation's Executive Compensation Program (the "Program") and
is directly responsible for all compensation actions affecting the Corporation's
most senior executives.
The Committee meets on a regular basis throughout the year. The Committee
frequently utilizes information about other companies' compensation practices,
including information provided by outside consultants. These companies are not
necessarily the same companies that are most appropriate for comparing
shareowner returns in the corporate performance graph. Accordingly, the
competitive information considered by the Committee includes twelve of the
companies included in the corporate performance graph on page 18, as well as
twenty four other companies (the "Compensation Peer Group"). Compensation Peer
Group companies have characteristics similar to the Corporation such as
diversified product lines, global operations, and sales volumes. In addition,
such companies often compete with the Corporation for executive talent. The
Corporation targets the value of the Program for its most senior executives,
including the named executive officers, to be between the 50th and 75th
percentile of the Compensation Peer Group.
The Program is designed to reward performance that is directly relevant to
the Corporation's short term and long term success. The Committee evaluates
managerial performance on the basis of financial criteria such as share price,
earnings per share, operating profit at the business units, net cash flow,
working capital turnover rates, and return on equity. The Committee also
considers non-financial factors such as quality and efficiency improvements,
market share, international business development, improvements in customer
relations, product development and other strategic achievements of long term
significance that may not have immediate financial impact. For 1993, the
Committee continued to view the Corporation's restructuring program to be of
critical importance.
Executive Compensation Program Objectives
The Program is designed and administered to achieve two principal
objectives. First, the Program is intended to be fully competitive for the
purpose of assuring that the Corporation is able to attract, motivate and retain
talented executives. Competitive base salary levels and benefit programs are
important Program components intended to achieve this objective. Second, the
Program is intended to create an alignment of interests between the
Corporation's executives and shareowners so that a significant portion of each
executive's compensation varies with individual and corporate performance.
Elements of performance-based compensation include equity based awards
under the Long Term Incentive Plan (the "LTIP"). The value of stock option,
restricted share and other awards under the LTIP is correlated with the value of
the Corporation's Common Stock and directly links executive and shareowner
interests. Under the Continuous Improvement Incentive Program (the "CIIP"),
LTIP awards are subject to vesting on the basis of three-year financial and
strategic objectives. CIIP objectives are established separately for each
business unit. The Corporate Office CIIP objective is the composite average of
the business units' CIIP objectives, except for the most senior corporate office
executives whose objectives are the composite average of the business units'
CIIP objectives (50% weighting) and the Corporation's return on equity objective
(50% weighting). CIIP awards include non-qualified stock options, restricted
15
PAGE
share units ("RSUs") and dividend equivalents ("DEs"). One RSU is awarded for
every two stock options and one DE is awarded for each stock option. Stock
options vest after a three-year holding period, or earlier, if CIIP objectives
are achieved. The value realized under stock options is correlated directly
with share price appreciation. Each RSU is equal in value to one share of
Common Stock. RSUs vest only to the extent CIIP objectives are achieved. 50%
of vested RSUs are paid in cash and 50% are converted to shares of UTC Common
Stock that may not be sold until termination or retirement, thereby fostering
long term executive share ownership. DEs are equal in value to dividends paid
on UTC Common Stock for up to two years and vest only to the extent that the
CIIP objectives are achieved. The amount of CIIP awards for 1991-1993 was
determined at the inception of the CIIP in 1991, taking into account competitive
practices at other companies with respect to long term incentive awards. Awards
for 1994 will not include RSUs or accelerated vesting of options.
As further discussed below, the amount of cash incentive compensation
awards paid under the Annual Executive Incentive Compensation Plan and
adjustments to base salary each vary in accordance with individual, business
unit and corporate performance.
Chief Executive Officer Compensation for 1993
Mr. Daniell's total compensation reflects an assessment of short term and
long term corporate performance and an assessment of Mr. Daniell's individual
performance as Chairman and Chief Executive Officer.
During 1993 the Corporation made progress on previously established long
term objectives: (i) the restructuring program; (ii) improvement in financial
performance and operating efficiencies; and (iii) development of international
markets. The restructuring program progressed in 1993 with respect to
manufacturing floor space and operating expense reductions. As a result of
progress to date, the restructuring program goal of eliminating $1 billion of
annual operating expense by the end of 1994 is attainable. Financial and
operating performance improved as measured by several criteria. The Corporation
turned over its working capital 4.86 times in 1993, its best performance ever.
Working capital turnover rates for 1992 and 1991 were 4.26 and 3.94,
respectively. For 1993, net debt was reduced $254 million in spite of
restructuring expenditures of $393 million and customer financing requirements
of $208 million.
During 1993, the Corporation continued to compete successfully in
international markets with 53% of total revenues derived from non-U.S. sales.
Sales and profit growth in Far East markets are becoming increasingly important
factors in the Corporation's results. This strategy is intended to provide an
important part of future growth.
The Committee believes that 1993 was a year of steady and deliberate
progress for the Corporation. Success in the initiatives described above is
critical to the long term success of the Corporation. From August of 1991 (the
time the restructuring program was announced) through December 31, 1993,
aggregate share price appreciation was 35.1% compared with 24.9% for the Dow
Jones Industrial Average. Such performance suggests investor confidence in
management's definition and implementation of strategic objectives for the
Corporation. For 1993, the Corporation earned $3.30 per share, an increase from
1992 in spite of adverse economic conditions in Europe and the airline industry.
The Committee's favorable view of Mr. Daniell's performance resulted in
certain compensation actions taken by the Committee. Mr. Daniell's salary
during 1993, which is based on comparisons with the Compensation Peer Group and
an overall assessment of individual performance, increased 9.5% over 1992,
16
PAGE
placing his salary between the 50th and 75th percentile for chief executive
officers within the Compensation Peer Group.
Mr. Daniell vested in 12,457 restricted share units under the CIIP. This
vesting occurred as a result of the average of the business units' achievements
of their CIIP objectives (50% weighting) and the Corporation's achievement of
its 1993 return on equity objective (50% weighting). Mr. Daniell's 1993 CIIP
award was determined as part of this three-year program.
Mr. Daniell received an $800,000 cash incentive compensation award in
respect of 1993, based on the performance criteria discussed in this report.
The Committee does not use a formula for the purpose of establishing a direct
correlation between award amounts and any specific financial or strategic
achievement or any combination of such achievements. Rather, the Committee
considers the various components of Corporate and individual performance in
reaching its overall judgment of Mr. Daniell's performance for the year. Among
the factors considered, progress in the restructuring program, cash flow
performance and earnings were of particular significance to the Committee in
assessing overall performance for 1993. This award, in combination with base
salary, results in total cash compensation between the 50th and 75th percentile
for chief executive officers within the Compensation Peer Group.
Performance-Based Compensation for Executives in 1993
For 1993, certain of the Corporation's executives received variable cash
incentive compensation awards under the Annual Executive Incentive Compensation
Plan determined on the basis of corporate, business unit and individual
performance. The Committee determines the amount available for incentive cash
awards at the Corporate Office on the basis of aggregate corporate financial
performance and other factors (as detailed in the introduction to this Report).
The determination of the amount of such pool is not directly contingent upon any
single achievement, but instead reflects the Committee's overall judgment of
Corporate performance, taking into account the foregoing factors. For 1993,
earnings and cash flow were significant factors in establishing award pools
under the Annual Executive Incentive Compensation Plan. Individual awards are
determined as a percentage of base salary based on pre-established target ranges
applicable to the executive's position, subject to adjustment for individual and
business unit or corporate performance, as appropriate.
The Chairman and Chief Executive Officer determines the amount of incentive
compensation to be made available to the business units. Based on the business
units' 1993 performance, incentive compensation pools were established at all
business units. Results improved at most business units in 1993. Sikorsky and
Otis posted record results in spite of adverse economic conditions in the U.S.
and Europe. Carrier continued a turnaround that began in 1992. UT Automotive
and Norden Systems both posted positive financial results compared with 1992.
Pratt & Whitney and Hamilton Standard did not evidence improved results, due
largely to the ongoing recession in the commerical airline industry and reduced
defense spending. Pratt & Whitney's results were negatively affected due to
cancellation and rescheduling of airline orders. However, both Pratt & Whitney
and Hamilton Standard continue to take the necessary actions to restructure
their businesses in response to sustained adverse conditions in the airline
industry.
Effective January 1, 1994, the Internal Revenue Code was amended to
disallow deductions for executive compensation in excess of $1 million to named
executive officers. However, this deduction limitation does not apply to
"performance-based" executive compensation. The Internal Revenue Service
recently issued proposed regulations interpreting this new rule. The
Corporation has reviewed the proposed regulations and has determined that it
will make no immediate changes to its executive compensation programs in
17
PAGE
response to the proposed IRS rules. The Corporation believes that its executive
compensation programs are already substantially based on Company and individual
performance. The Corporation also expects that the amount of non-deductible
executive compensation that might be paid in 1994 will not be material relative
to overall executive compensation payments. For these reasons, the Corporation
believes it most prudent to await further guidance from the Internal Revenue
Service before making substantive changes to its executive compensation programs
to assure that the maximum amount of executive compensation will be deductible
under the new tax rules.
Conclusion
Through the management of the Corporation's Executive Compensation Program
in the manner described above, executive compensation is linked directly to
individual and corporate performance and stock price appreciation. By balancing
the elements of compensation, the Program is both competitive and performance
driven. In 1993, as in previous years, a substantial portion of the
Corporation's executive compensation was based on individual and corporate
performance-based variables that will motivate and focus management on those
issues that are critical to the future success of the Corporation. The
Committee intends to continue the policy of linking executive compensation to
individual performance, corporate performance and returns to shareowners.
Committee Members
Robert F. Dee, Chairman Charles W. Duncan, Jr.
Howard H. Baker, Jr. Jacqueline G. Wexler
Compensation Committee Interlocks and Insider Participation
Senator Howard H. Baker, Jr. serves as a member of the Committee on
Compensation and Executive Development of the Board of Directors. As noted
previously, Senator Baker is also a partner in the law firm of Baker,
Worthington, Crossley, Stansberry & Woolf. This firm is retained from time to
time to provide legal services; fees paid during 1993 were not material to total
revenues for either the law firm or United Technologies.
Performance Graph
The following graph presents a comparison of the cumulative total
shareowner return for the five years ending December 31, 1993 on the
Corporation's Common Stock as measured against the Standard & Poor's 500 Stock
Index and the Dow Jones 30 Industrials Index. The Corporation is a component of
both indices. These figures assume that all dividends paid over the five-year
period were reinvested, and the starting value of each index and the investment
in the Corporation's Common Stock was $100 on December 31, 1988.
[Graph inserted at this point showing dollars from $100 to $220 on the vertical
axis and years (1988 through 1993 on the horizontal axis. Data points for the
graph are as follows.]
1988 1989 1990 1991 1992 1993
United Technologies $100.0 $136.2 $124.5 $146.5 $134.9 $179.7
18
PAGE
Standard & Poor's 500 $100.0 $131.6 $127.5 $166.2 $178.8 $196.8
Dow Jones Industrial Average $100.0 $129.2 $131.8 $166.8 $174.5 $193.8
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements
In 1981, the Board of Directors adopted the Senior Executive Severance Plan
(the "Severance Plan"). The Committee on Compensation and Executive Development
has been delegated the authority to select the participants under the Severance
Plan. Effective December 31, 1993, there were 35 key executives, including the
five named executive officers, covered under the Severance Plan. The Severance
Plan provides that in the event of termination of the participant's employment
with the Corporation for any reason (other than death, disability or retirement
at or after the normal retirement date) within two years after any change in
control of the Corporation, as defined in the Severance Plan, the participant
will receive: (i) a cash payment of three times the participant's highest annual
compensation (including base salary and incentive compensation) during the
preceding three years; (ii) accelerated vesting of all awards outstanding under
the Corporation's Long Term Incentive Plan; (iii) special supplemental
retirement benefits determined as if the participant had three years additional
credited service under the Corporation's pension plans as of the date of
termination; and (iv) continuation of other fringe benefits or equivalent
benefits for a period of three years. The Severance Plan provides for a
supplemental cash payment to Severance Plan participants to the extent necessary
to preserve the level of benefits provided in the Plan in the event of the
imposition on any such participant of excise taxes payable in respect of "excess
parachute payments" under the Internal Revenue Code.
In addition to the Severance Plan, 30 key executives, including the five
named executive officers, are eligible to receive separation benefits at the
time of their termination from employment with the Corporation, subject to
certain limited exceptions. The value of such separation benefits under this
program is 2.5 times base salary at the date of separation. Benefits are
subject to offset against any amounts paid pursuant to the Senior Executive
Severance Plan (as described above).
Pension Plan
PENSION PLAN TABLE
Years of Service
15 20 25 30 35 40
$ 500,000 $147,000 $195,900 $219,900 $243,900 $268,200 $
293,200
$ 750,000 $222,000 $295,900 $332,400 $368,900 $405,700 $
443,200
$1,000,000 $297,000 $395,900 $444,900 $493,900 $543,200 $
593,200
19
PAGE
$1,250,000 $372,000 $495,900 $557,400 $618,900 $680,700 $
743,200
$1,500,000 $447,000 $595,900 $669,900 $743,900 $818,200 $
893,200
$1,750,000 $522,000 $695,900 $782,400 $868,900 $955,700 $1,043,200
Compensation covered by the pension plans of the Corporation and its
subsidiaries includes total cash remuneration in the form of salaries and wages,
including awards paid under the Annual Executive Incentive Compensation Plan
(shown in the Bonus Column of the Summary Compensation Table) but excluding
awards paid under the United Technologies Corporation Long Term Incentive Plan
(shown in the Long Term Compensation Columns of the Summary Compensation Table).
Benefits are computed as a percentage of final average earnings during the
highest five consecutive years out of the last ten years worked, less a portion
of the participant's social security benefit.
As of December 31, 1993, the executive officers named in the Summary
Compensation Table had the following full years of credited service for
determining benefits: R. Daniell, 37 years; G. David, 18 years; I. Yoskowitz,
14 years; K. Krapek, 11 years; and, S. Page, none.
ITEM NO. 2.
APPOINTMENT OF GENERAL AUDITOR
The Audit Review Committee has nominated the firm of Price Waterhouse to be
General Auditor of the Corporation, to act until the 1995 Annual Meeting.
During 1993, Price Waterhouse provided the Corporation with audit and related
services, as well as certain non-auditing services. Fees for services provided
totaled approximately $19,500,000. Services rendered by Price Waterhouse are
approved by the Audit Review Committee and reviewed for any possible effect on
independence; whenever possible, this approval is obtained prior to the
rendering of the service and in other cases as soon thereafter as practicable.
Representatives of Price Waterhouse are expected to be present at the
annual meeting with the opportunity to make such statements as they desire.
They will also be available to respond to appropriate questions from
shareowners.
SHAREOWNER PROPOSALS
Submission of Shareowner Proposals
Proposals of shareowners intended to be presented at the 1995 Annual
Meeting must be received by the Corporation no later than November 7, 1994.
Such proposals may be included in next year's Proxy Statement if they comply
with certain rules and regulations established by the Securities and Exchange
Commission.
The Board of Directors carefully considers all proposals and suggestions
from shareowners. When adoption is clearly in the best interest of the
Corporation and the shareowners, and can be accomplished without shareowner
approval, the proposal is implemented without inclusion in the proxy material.
However, the Board of Directors does not agree with all shareowner proposals
submitted and must oppose those with which it disagrees to fulfill the Board's
20
PAGE
obligations to represent and safeguard the best interests of shareowners as a
whole.
The name, address and number of shares held by all shareowners submitting
proposals will be furnished to any person upon request to the Corporation.
21
PAGE
ITEM NO. 3
SHAREOWNER PROPOSAL RECOMMENDING EXPANDED
DISCLOSURE OF EXECUTIVE COMPENSATION
The Corporation has been informed that a shareowner intends to submit a
proposal for adoption at the annual meeting which recommends that future proxy
statements list the names, titles and compensation amounts for each executive
with a base salary of more than $100,000.
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO ITEM NO. 3
The Securities and Exchange Commission, after two years of intensive study,
adopted new rules for proxy disclosure of executive compensation. Public
companies now provide significant additional information concerning the Chief
Executive Officer and the next four most highly compensated executive officers.
This information is provided to shareowners in easy to read charts rather than
by narrative description, as previously required. This simplified format allows
shareowners to better understand the compensation paid to those executives most
responsible for the Corporation's performance.
The Board does not agree that providing further information on compensation
paid to executives beyond the five most highly compensated executives would be
of material assistance to shareowners in making voting and investment decisions.
Further, the Corporation could be put at a competitive disadvantage were it
required to make more extensive disclosures on compensation than other public
corporations. Therefore, the Board recommends that the shareowners cast their
votes against this resolution.
TEXT OF SHAREOWNER PROPOSAL
"RESOLVED: That the shareowners recommend that the Board take the
necessary step that United Technologies specifically identify by name and
corporate title in all future proxy statements those executive officers,
not otherwise so identified, who are contractually entitled to receive in
excess of $100,000 annually as a base salary, together with whatever other
additional compensation bonuses and other cash payments were due them."
SUPPORTING STATEMENT OF SHAREOWNER
"REASONS: In support of such proposed Resolution it is clear that the
shareowners have a right to comprehensively evaluate the management in the
manner in which the Corporation is being operated and its resources
utilized. At present only a few of the most senior executive officers are
so identified, and not the many other senior executive officers who should
contribute to the ultimate success of the Corporation. Through such
additional identification the shareowners will then be provided an
opportunity to better evaluate the soundness and efficacy of the overall
management.
Last year, the owners of 24,466,654 shares, representing approximately
22.9% of shares voting, voted FOR this proposal.
If you AGREE, please mark your proxy FOR this proposal."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
________________________________________________________________________
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ITEM NO. 4
SHAREOWNER PROPOSAL REGARDING
EMPLOYMENT IN NORTHERN IRELAND
The Corporation has been informed that shareowners intend to submit the
proposal set forth below for adoption at the annual meeting requesting the
Corporation to make all possible lawful efforts to implement or increase
activity on each of the nine MacBride Principles.
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO ITEM NO. 4
Employment decisions in Northern Ireland and throughout the United
Technologies organization are based solely upon the job applicant's
qualifications for the available position. Further, every effort is made to
maintain a safe and secure workplace for employees. In Northern Ireland, one of
many steps taken by plant management toward that goal is the prohibition of
displays of religious and/or political emblems.
Because the Automotive plant is located in an area of Northern Ireland
dominated by one religious group, the majority of employees are also of that
religious affiliation. In an effort to ensure equal opportunity for all
potential employees, recruitment efforts and advertisements for available
positions are extended beyond the immediate geographical area. The facility
complies with all fair employment legislation, including requirements to
register with the Fair Employment Commission, to submit regular monitoring
returns showing religious composition of the workforce and to review employment
practices on a regular basis. It also enforces its own strict fair employment
policy.
The Corporation will continue to uphold its policies of non-discriminatory
hiring and equal opportunity throughout the organization.
TEXT OF SHAREOWNER PROPOSAL
_WHEREAS, United Technologies Corporation operates two wholly-owned
subsidiaries in Northern Ireland, United Technologies Automotive (U.K.),
and Otis Elevator PLC Ltd.,
WHEREAS, employment discrimination in Northern Ireland has been cited by
the International Commission of Jurists as being one of the major causes of
the conflict in that country;
WHEREAS, Dr. Sean MacBride, founder of Amnesty International and Nobel
Peace laureate, has proposed several equal opportunity employment
principles to serve as guidelines for corporations in Northern Ireland.
These include:
1. Increasing the representation of individuals from underrepresented
religious groups in the workforce including managerial, supervisory,
administrative, clerical and technical jobs.
2. Adequate security for the protection of minority employees both at
the workplace and while traveling to and from work.
3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special
recruitment efforts should be made to attract applicants from
underrepresented religious groupings.
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5. Layoff, recall, and termination procedures should not in practice,
favor particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions, and
differential employment criteria, which discriminate on the basis of
religion or ethnic origin.
7. The development of training programs that will prepare substantial
numbers of current minority employees for skilled jobs, including
the expansion of existing programs and the creation of new programs
to train, upgrade, and improve skills of minority employees.
8. The establishment of procedures to assess, identify and actively
recruit minority employees with potential for further advancement.
9. The appointment of a senior management staff member to oversee the
company's affirmative action efforts and the setting up of
timetables to carry out affirmative action principles.
RESOLVED, Shareowners request the Board of Directors to:
1. Make all possible lawful efforts to implement and/or increase
activity on each of the nine MacBride Principles._
SUPPORTING STATEMENT OF SHAREOWNER
__Continued discrimination and worsening employment opportunities have
been cited as contributing to support for a violent solution to Northern
Ireland's problems.
_In May 1986, the United States District Court ruled in NYCERS v.
American Brands, 634 F. Supp. 1382 (S.D.N.Y., May 12, 1986) that `all
nine of the MacBride Principles could be legally implemented by
management in its Northern Ireland facility.'
_An endorsement of the MacBride Principles by United Technologies will
demonstrate its concern for human rights and equality of opportunity in
its international operations. Please vote your proxy FOR these
concerns._
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
_____________________________________________________________________
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ITEM NO. 5
SHAREOWNER PROPOSAL REGARDING
FOREIGN MILITARY SALES
The Corporation has been informed that shareowners intend to submit the
proposal set forth below regarding foreign military sales for adoption at the
annual meeting, requesting the Board of Directors to provide a comprehensive
report on United Technologies' foreign military sales as detailed below.
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO ITEM NO. 5
United Technologies conducts business in international markets within the
laws and regulations established by the United States Government. Exports of
military equipment are controlled by the federal government in furtherance of
the national security and foreign policy goals of the United States. Under our
laws, the federal government is responsible for the continuous supervision and
general direction of foreign military sales, financing, cooperative projects and
exports. Current law forbids sales to certain countries and requires that
decisions on licensing of exports take into account whether the export of an
article will contribute to an arms race, support international terrorism or
increase the possibility of outbreak or escalation of conflict. United
Technologies' aerospace products and services have civilian as well as defense
applications, and this factor is also considered by the government in its
approval process.
The Board believes most of the information requested by the proponents,
including contract terms and sales strategies, is sensitive business information
which, if released, would place the Corporation at a disadvantage to its
competitors.
Therefore, the Board is unable to support this proposal and recommends that
the shareowners cast their votes against this resolution.
TEXT OF SHAREOWNER PROPOSAL
_WHEREAS, the wars in Somalia and Bosnia-Hercegovina focus world attention
on the bitterness and horror of modern war and fears of mass destruction of
people and their whole way of life.
WHEREAS, during the 1991 Persian Gulf war, United States/Allied Forces
faced state-of-the-art weapons in Kuwait and Iraq, most of which were not
produced by Iraq. Public attention has been drawn to the more than sixty
U.S. corporations who were members of the United States-Iraq Business Forum
as of July 1990 and the forty U.S. corporations known to have helped
transform Iraq's strategic weapons program between 1970 and 1990.
WHEREAS, Business Executives for National Security urges `a company, when
confronting an export opportunity which may be linked to weapons
proliferation, to ask itself not only _Is it legal?_ but `Is it right?'
WHEREAS, in FY1992 United Technologies ranked 9th among corporations
licensed to export military equipment with sales in excess of $198 million;
RESOLVED, the shareowners request the Board of Directors to provide a
comprehensive report on United Technologies' foreign military sales. The
report should be available to all shareowners within six months of the 1994
Annual Meeting, may omit classified and proprietary information and be
prepared at reasonable cost._
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SUPPORTING STATEMENT OF SHAREOWNER
_Global security is not just security of territory, it is security of
people. It is not just security through weapons, it is security through
jobs, human development, environmental sustainability. We believe the most
significant obstacle to genuine global security is the amount of money
nations of the world spend on weapons. This figure is currently over $1
trillion annually.
Given unchecked sales of state-of-the-art weaponry and the number of
regional wars, it is reasonable to ask how our Company operates in this
arena. We hope the report will include:
1. Criteria used to promote foreign military sales.
2. Procedures used to negotiate sales directly with foreign
governments or through the U.S. government. For example, how is
it determined what weapons are direct commercial arms sales and
what must be negotiated by the U.S. government through the
Pentagon? What percentage is commercial arms sales and what is
foreign military sales?
3. Categories of military equipment exported for the past three
years, with as much statistical information as is permissible;
contracts for servicing/maintaining equipment; and licensing
and/or co-production with foreign governments.
Frankly, the resolution proponents are appalled by military industry
calls for a $5,000,000,000 loan guarantee for foreign military sales to
poor nations because ultimately the U.S. will pay for foreign wars while
further degrading the U.S. industrial base. We are equally disturbed at
industry's claims and lobbying efforts asserting the only way to keep jobs
is to promote foreign military sales. We believe such statements are
contradictory in light of co-production agreements and transfer of
technology to foreign companies. Such contracts with foreign companies/
governments have strong implications for U.S. workers during this time of
accelerated down-sizing of our workforce.
If you agree, please support this resolution by voting YES._
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
____________________________________________________________________
ITEM NO. 6
SHAREOWNER PROPOSAL REGARDING A CODE OF CONDUCT FOR BUSINESSES OPERATING IN
SOUTH AFRICA
The Corporation has been informed that a shareowner intends to submit the
proposal set forth below concerning a code of conduct for businesses operating
in South Africa for adoption at the annual meeting.
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THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO ITEM NO. 6
United Technologies and Otis Elevator Company Limited ("Otis-South
Africa"), a subsidiary of Otis Elevator Company, have always followed ethical
business practices in operating and investing in their businesses. The Board
has always believed that the most effective way to contribute to a healthy South
African economy and society is by remaining engaged in the local community.
Otis has a long and positive record of success in its business in South
Africa and has been a consistent opponent of apartheid. Our employment
practices on a global basis, as well as in South Africa, emphasize fairness and
equal employment principles. We will continue these practices. We hope that
other foreign companies will soon join us in doing business in South Africa.
With democratic elections about to take place, the newly elected
representatives of the South African people will pass appropriate legislation to
govern the workplace. The Board believes that the new government will set
appropriate safeguards for the work force. Both the U.S. Department of State
and the Statement of Principles Program have also said that they intend to phase
out their programs following the April elections.
For these reasons, the Board recommends a vote against the proposal.
TEXT OF SHAREOWNER PROPOSAL
"... shareowners request the Board of Directors:
1. to endorse the Code of Conduct for Business Operating in South
Africa [ as adopted by the South African Council of Churches on
July 8, 1993 ] and
2. report to shareowners on its implementation."
SUPPORTING STATEMENT OF SHAREOWNER
"During 1993, negotiations in South Africa resulted in a date, April 27,
1994, for the first non-racial elections. The talks also established a
Transitional Executive Council to oversee the change to a new democratic
South Africa. These actions resulted in the call to lift international
sanctions and to reinvest to build a new South Africa.
Meanwhile, deaths from unabated violence make the transition to peace
difficult. Moreover, while statutory apartheid has ended, its economic and
social legacy continue:
Education: The rate of illiteracy is 50%. The apartheid government
spent four times the amount on whites for education that it did on
blacks, and maintained 14 education departments.
Economy: Wealth continues to be concentrated in white hands. Black
incomes are one tenth those of whites, while black unemployment is
50%. Four groups of companies control 80.7% of the capitalized value
of the Johannesburg Stock Exchange.
Housing and Land: Over seven million people live in makeshift
shanties and the backlog of affordable housing is between 1.2 million
and 1.4 million units. Poverty among blacks leaves 60% with
inadequate incomes to invest in housing. Forced removals of blacks to
homelands placed 44% of the nation's population on 13% of the land.
These removals continued into 1993.
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Health and Environment: The average black infant is six times more
likely to die during its first six months than the average white
infant. The mining industry operates with little regulation of health
and environmental impact. In some townships 40% of residents have
asbestos-related cancer from mining waste in their communities.
We believe the international business community should assist in rebuilding
a viable economy within a just social structure.
The South African Council of Churches on July 8, 1993, adopted a Code of
Conduct for Business Operating in South Africa. This ethical framework for
investment grew out of collaborative work with the African National
Congress (ANC), the Coalition of South African Trade Unions (COSATU),
numerous other political, community and business organizations and
international partners. It is similar to the Platform of Guiding
Principles announced in November 1992 by the ANC and COSATU.
The SACC Code summons business to play a constructive and creative role in
partnership with workers, communities and other members of civil society to
lay the economic foundations for a stable and prosperous South Africa. Its
planks call for equal opportunity, training and education to increase
productive capacities, protection of workers' rights, a safe and healthy
workplace, job creation, social responsibility programs developed in
consultation with communities affected, disclosure of product hazards to
consumers, environmentally sound products and practices, support for black-
owned businesses, and disclosure of information needed to monitor Code
implementation.
We believe this Code presents an acceptable ethical framework for our
company's South African operations and will improve its standing in its
communities and markets in South Africa.
Therefore, shareowners request the Board of Directors:
1. to endorse the Code of Conduct for Business Operating in South
Africa and
2. report to shareowners on its implementation."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
____________________________________________________________________
OTHER BUSINESS
The Board of Directors knows of no other matters to be voted upon at the
meeting. However, the persons named in the enclosed proxy card will, at their
discretion, vote the shares they represent upon any other business that may
properly come before the meeting.
PROXIES AND VOTING
Tabulation and Secrecy of Votes
Pursuant to the Bylaws of the Corporation, the Board of Directors has
appointed representatives of First Chicago Trust Company of New York to serve as
Inspectors of Election to supervise the votes at the annual meeting. The
Inspectors will decide all questions respecting the qualification of voters, the
validity of the proxies and the acceptance or rejection of votes. None of the
Inspectors is an officer, employee or shareowner of the Corporation. In
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addition, the Corporation has engaged the services of First Chicago Trust
Company of New York to receive, inspect, tabulate and maintain custody of
proxies returned to First Chicago Trust Company of New York for voting. The
Inspectors and all other persons, including employees of First Chicago Trust
Company of New York and the Corporation, whose duties require the handling of
proxies and tabulation of votes, have been instructed that the vote of any
shareowner will be kept secret and shall not be disclosed except as may be
required for legal purposes.
Solicitation
Solicitation of proxies is being made by the Board of Directors through the
mail, in person and by telegraph and telephone. The cost will be borne by the
Corporation. In addition, arrangements have been made with brokerage houses and
other custodians to send proxies and proxy soliciting material to the persons
for whom they hold shares, and the Corporation will reimburse them for their
expenses in so doing. The Corporation has also retained Georgeson & Company
Inc., New York, NY, to aid in the solicitation of proxies at a fee estimated at
$15,500 plus out-of-pocket expenses.
Revocation
A shareowner executing and returning a proxy has the power to revoke it at
any time before it is voted by giving written notice of such revocation to the
Secretary of the Corporation, by submission of another proxy bearing a later
date, or by attending the meeting and requesting to vote in person.
Signatures in Certain Cases
If a shareowner is a corporation, the enclosed proxy should be signed in
its corporate name by an authorized officer and his/her title should be
indicated. If stock is registered in the names of two or more trustees or other
persons, the proxy may be signed by one of them. If stock is registered in the
name of a decedent, the proxy should be signed by an executor or administrator,
whose title as such should follow the signature.
Quorum and Vote Required for Approval
The presence, in person or by proxy, of the owners of a majority of the
votes entitled to be cast, without distinction as to class, is necessary for a
quorum at the annual meeting. Directors are elected by a plurality of votes
cast. The favorable vote of the owners of a majority of the votes present or
represented at the meeting is required for the appointment of Price Waterhouse
as General Auditor and for the adoption of the shareowner proposals with respect
to disclosure of executive compensation, employment in Northern Ireland, a
report on foreign military sales, and a code of conduct for businesses operating
in South Africa.
In the case of each of the matters that requires a favorable vote of the
owners of a majority of the votes present or represented at the meeting, all
shares as to which an abstention has been indicated on the proxy will be
considered present for the purpose of establishing a quorum, but will not count
either "for" or "against" with respect to the matter or matters that are the
subject of the abstention.
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Action to be Taken Under the Proxy
In accordance with the recommendations of the Board of Directors, all
proxies will be voted, if no contrary instruction is indicated on the proxy, for
the election as directors of the persons nominated by the Board of Directors,
for the appointment of Price Waterhouse as General Auditor and against the
shareowner proposals.
Savings Plans
A separate proxy card has been sent by the Trustee to each employee who
participates in a Savings Plan of the Corporation or its subsidiaries through
investment in a UTC Stock Fund or the Employee Stock Ownership Plan. Shares
held in the UTC Stock Fund will be voted by the Trustee in accordance with each
employee's directions. If an employee does not mark instructions on the card or
if the employee does not return the instruction card to the Trustee, the Trustee
will vote such shares in accordance with the instructions it receives with
respect to a plurality of the shares for which instruction cards are received by
the Trustee. All employer stock in the ESOP Fund that has been allocated to the
employees' accounts for which the Trustee receives voting instructions will be
voted in accordance with those instructions. All employer stock that has been
allocated to the employees' accounts but for which the Trustee has not received
voting instructions, and all unallocated shares in the ESOP account, will be
voted by the Trustee in accordance with the instructions it receives with
respect to a plurality of the shares that are allocated to the employees' ESOP
accounts.
ANNUAL REPORT
The Corporation's Sixtieth Annual Report, including financial statements
for the year 1993, was mailed to shareowners on or about February 25, 1994.
William H. Trachsel
Vice President and Secretary
Hartford, Connecticut
March 11, 1994
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