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March 29, 2001
Worker Files Shareholder Resolution with United Technologies

Shareholders will be asked to support the linking of executive pay with employee satisfaction.


More and more workers in the U.S. are becoming shareholders of their employer through popular retirement funds and 401(K) plans. As such, employees gain another venue for voicing issues of concern to senior management. An employee of Pratt & Whitney Aircraft, which is a division of United Technologies Corporation (ticker: UTX) is doing just that by filing a shareholder resolution on the issue of executive compensation.

Donna Benson, a 21-year veteran of Pratt & Whitney, wants to tie executive pay to employee development and satisfaction. Benson says one of the major reasons she filed the resolution was the morale of here co-workers. Last year the company increased senior managers' pay and bonuses even as the company continued to shed jobs.

"People have been laid off even when sales levels have stayed the same," she said. "We don't feel like they (management) really pay attention to us," she added.

While Benson filed the resolution on her own, she has had the full support of the International Association of Machinists & Aerospace Workers (IAM).

"This proposal makes sense for the employees and the company," said John Harrity, a spokesperson for District 91 of the IAM. District 91 represents 6,600 workers at Pratt & Whitney, Hamilton Sundstrand, and International Fuel Cell plants in Connecticut. All are subsidiaries of United Technologies Corporation (UTC).

UTC argued against the resolution with the Securities and Exchange Commission (SEC), claiming that the issues were ordinary business and should be handled by the Board of Directors. The company also said the resolution would not benefit shareholders as a whole. Each of UTC's arguments, however, were rejected.

The company says senior management fully understands how critical it is to attract and keep good employees, and that the issues in the resolution are already being addressed. One employee-development benefit the company offers is the Employee Scholar Program. It pays 100 percent of all expenses for an associates, bachelors or graduate degree. Upon graduation, the employee also is awarded stock. An associates degree receives $5,000 worth of stock, and a bachelors or graduate degree receives $10,000 worth.

"Our Employee Scholar Program is unmatched," said Paul Jackson, a UTC spokesperson. "Since 1996 the program has spent $200 million, and over 7,000 employees have received degrees. What other company is doing that?" he asked.

Benson has taken advantage of the program herself. She has finished her bachelors degree and is currently working on a graduate degree. While acknowledging that it is an excellent program, she says it does not address the issue of listening to employees. And she believes stockholders should be concerned about that.

"I'm a shareholder. A lot of my co-workers are shareholders," said Benson. "The happier your personnel are on the floor, and the more you listen to them, the more return they (shareholders) are going to get on their dollar because the morale is going to be up."

Other companies such as Sears, Roebuck & Co. (ticker: S) have implemented programs that link part of executive compensation to employee satisfaction. At Eastman Kodak (EK), Paul Allen, Manager of Corporate Media Relations, reported that his company conducts monthly and spot surveys to monitor employee satisfaction. The information, tracked on a yearly basis, is kept in a data bank.

The UTC resolution, to be voted on at the company's annual meeting in Syracuse, New York on April 27, most likely will be turned down. But Ms. Benson raises an issue that up to now may have not reached all levels of management. As a shareholder, she has senior management's attention now.

 

 
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