Press Release
For Immediate Release - April 22, 1999
Contact:Betsy Leondar-Wright
(617) 423-2148 x13

Shareholders Press AlliedSignal on Wage Gap, Executive Raises After 11,000 Layoffs

"AlliedSignalís efforts to cut costs have been disproportionately focused on the factory floor, while ignoring the executive suite and the board room, further exacerbating the wage gap between corporate leaders and average employees."- Shareholder Resolution

An AlliedSignal shareholder resolution is challenging the company's Board of Directors to set a maximum ratio between the pay of the CEO and that of the lowest-paid worker in the company. Resolution filers point to CEO and Board raises despite 11,000 layoffs from 1995 to 1997 and further layoffs planned for 1999.

AlliedSignal shareholders will vote Monday April 26 in Morris Township, New Jersey, on the shareholder resolution, which is part of a national campaign addressing the wage gap that was profiled in the April 8 Wall Street Journal. Members and supporters of Responsible Wealth, a project of United for a Fair Economy, have introduced shareholder resolutions about wage inequities between CEOs and average workers at nine U.S. corporations so far this year.

The resolution will be presented by Shelley Alpern of Trillium Asset Management (formerly Franklin Research and Development), which filed the resolution. (See attached statement and resolution.)

AlliedSignal CEO Lawrence A. Bossidy earned $14.1 million in 1998: $2 million in salary, $4 million in bonuses, and $8.1 million in realized stock options. His total pay was six times the average compensation of large industrial manufacturing companies, according to the Wall Street Journal, and 557 times the average factory workerís wage. In 1997 the Board of Directors voted itself a 43% raise.

Resolution proponents were prompted to act by the threat that the growing wage gap poses to working Americans and to the nationís economic well-being. According to Business Week, CEOs at large companies now earn an astounding 419 times the pay of average blue-collar workers, up from 42 times in 1980.

In addition to AlliedSignal, the Responsible Wealth resolutions have been introduced at AT&T, BankAmerica, BankBoston, Citigroup, Computer Associates, General Electric, Huffy and R.R. Donnelley. Most of the resolutions ask the company to set a reasonable ratio between CEO pay and the lowest-paid full-time employee in the company. One resolution asks the company to report on this ratio. Another resolution asked the company to conduct a pay equity study by race and gender.

The first of the resolutions, on gender and race pay equity, at the Chicago-based R.R. Donnelley & Sons on March 25, garnered a surprising 16.2% vote, or 13 million shares. This is a very strong showing given voting procedures that favor management positions on proxy resolutions; double-digit votes are rare. The Huffy resolution received 8.34% of the vote, the BankBoston resolution 4.83%, the General Electric resolution 5%, and the Citigroup resolution 8%.

"Many Americans now see CEO pay as out of control. Even Federal Reserve Chairman Alan Greenspan has publicly criticized such lavish compensation and severance packages,î according to Scott Klinger, director of the Responsible Wealth project of United for a Fair Economy.

United for a Fair Economy (UFE) is a national nonprofit organization that spotlights growing economic inequality and advocates shared prosperity. UFE recently published Shifting Fortunes: The Perils of the Growing American Wealth Gap.

Responsible Wealth, a project of UFE, is a growing network of over 400 business people, investors and affluent individuals in the top 5 percent of income and wealth working together to reverse the trend toward growing economic inequality.

Remarks of Shelley Alpern, Trillium Asset Management at AlliedSignal Annual Meeting -- April 26,1999

Good morning, my name is Shelley Alpern. I am a research analyst with Trillium Asset Management, a money manager specializing in socially responsible investing. I am here representing our client The Eleanora Halfman Trust. In filing this resolution we are acting in concert with Responsible Wealth, a nationwide network of business leaders and investors who have joined together to address the growing economic divide in America. This year, Responsible Wealth members have introduced nine shareholder resolutions on economic inequality with U.S. corporations.

There is growing belief in America that executive compensation is out of control. Earlier this year, Federal Reserve Chairman Alan Greenspan testified before Congress that shareholders were wasting their money on lucrative CEO compensation and severance packages. Mr. Greenspan concluded, however, that there was little the government could do to address this concern. While the government's hands may be tied, shareholders' hands are not.

In 1998, the average large company American CEO's compensation was 419 times that of the average manufacturing worker, up from 326 times last year and 42 times as recently as 1980, according to Business Week magazine.

AlliedSignal's CEO made nearly three times what the average large company American CEO made in 1998. Consider our CEOs pay graphically. An hour from here, the Empire State Building rises 1,454 feet above the New York City skyline. If Mr. Bossidy's $14.1 million total compensation in 1998 were represented by the height of the Empire State Building, how tall would the buildings represented by a typical AlliedSignal employee be? The typical factory worker, earning $35,000 a year, would be represented by a building just over three and a half feet tall. Even a well-compensated AlliedSignal manager, making $100,000 a year, would be represented by a building just one story tall. Considered globally, a typical employee working in an AlliedSignal Mexican factory and earning $4,500 a year would be represented by a building less than six inches in height!

Such towering discrepancies between corporate leaders and those they seek to lead create obvious problems within the corporation. The short-term nature of present compensation policies offer a perverse incentive that rewards a few leaders for laying off large numbers of workers while leaving the majority of workers more economically insecure, fearful that their jobs too will be downsized or restructured. Pay practices which encourage disloyalty to workers foster worker disloyalty in return.

Wide disparities in wealth also create social instability, which in turn harms the business climate. American businesses have learned during the last two years the losses that can result when highly wealth-stratified economies such as those in Russia, Indonesia, and Brazil crumble. For a time, wealth concentrated in the hands of the few can paint a false picture of growing national prosperity. It is, however a picture that is not sustainable.

It's time for a change! It is time to re-think the incentives we offer leaders of our corporation. It is time to look at the large option grants offered our leaders who already have options worth hundreds of millions of dollars, and ask "how much incentive is enough?" It is time that we refute the "great person theory of shareholder value" that one person is reasonable for the vast creation of wealth. It is time that we openly discuss the effects of concentrated wealth on our company, on the economy and on our democracy. Our proposal offers one simple solution to engage this discussion. We ask that AlliedSignal establish a ratio between highest and lowest paid workers. It asks that the success of our company's leaders be linked to the success and security of their colleagues, the co-creators of value for shareholders, customers and society.

America stands at an important crossroads. Will we head into the next century as a nation divided by two sets of economic values: one that operates on a "winner takes all" principle, the other founded on the deeply seated American dream that all people who work hard deserve economic security and the opportunity to improve their lot in life? The answer to this question is up to us -- as people-- as citizens -- and as shareholders.

Please vote "FOR" resolution number 3. Thank you.