HONEYWELL INTERNATIONAL INCHON
HONEYWELL INTERNATIONAL INC Stock Compensation Disclosure
STOCK-BASED COMPENSATION PLANS
The 2016 Stock Incentive Plan of Honeywell International Inc. and its Affiliates (2016 Plan) and 2016 Stock Plan for Non-Employee Directors of Honeywell International Inc. (2016 Directors Plan) were both approved by the shareowners at the Annual Meeting of Shareowners effective on April 25, 2016. As of December 31, 2025, there were 25.3 million and 0.8 million shares of Honeywell common stock available for future grants under terms of the 2016 Plan and 2016 Directors Plan, respectively.
In connection with the spin-off of the Advanced Materials business as described in Note 2 Acquisitions, Divestitures, and Discontinued Operations, all outstanding equity awards were equitably converted to preserve the pre-spin-off value, as required by the 2016 Plan and the 2016 Directors Plan. For vested and unexercised stock options, as well as unvested stock options and restricted stock unit (RSU) awards associated with Honeywell employees, the exercise price and number of shares were adjusted as applicable. The terms of the outstanding awards, including remaining vesting periods of unvested awards, remain the same after conversion. For all unvested stock options and RSU awards associated with Solstice employees, the awards were equitably converted into Solstice awards and are no longer outstanding under the Company’s plans. The adjustments did not result in additional compensation expense.
The information disclosed in this note includes the results of both continuing and discontinued operations in the aggregate.
STOCK OPTIONS
The exercise price, term, and other conditions applicable to each option granted under the Company's stock plans are generally determined by the Management Development and Compensation Committee of the Board. The exercise price of stock options is set on the grant date and may not be less than the fair market value per share of the Company's stock on that date. The fair value is recognized as an expense over the employee’s requisite service period (generally the vesting period of the award). Options generally vest over a four-year period and expire after 10 years.
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on implied volatilities from traded options on our common stock and historical volatility of the Company's common stock. The Company used a Monte Carlo simulation model to derive an expected term which represents an estimate of the time options are expected to remain outstanding. Such model uses historical data to estimate option exercise activity and post-vest termination behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. treasury yield curve in effect at the time of grant.
The following table summarizes the impact to the Consolidated Statement of Operations from stock options:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Compensation expense | $ | 50 | $ | 52 | $ | 48 | |||||||||||
| Future income tax benefit recognized | 10 | 12 | 11 | ||||||||||||||
The following table sets forth fair value per share information, including related weighted average assumptions, used to determine compensation cost:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Weighted average fair value per share of options granted during the year1 | $ | 43.69 | $ | 37.88 | $ | 38.84 | |||||||||||
| Assumptions | |||||||||||||||||
| Expected annual dividend yield | 2.55 | % | 2.60 | % | 2.50 | % | |||||||||||
| Expected volatility | 23.21 | % | 21.45 | % | 22.42 | % | |||||||||||
| Risk-free rate of return | 4.03 | % | 4.08 | % | 3.94 | % | |||||||||||
| Expected option term (years) | 4.92 | 4.87 | 4.86 | ||||||||||||||
| 1 | Estimated on date of grant using Black-Scholes option-pricing model. | |||||||
The following table summarizes information about stock option activity for the three years ended December 31, 2025:
| Number of Options (in millions) | Weighted Average Exercise Price | ||||||||||
Outstanding at December 31, 2022 | 14.1 | $ | 147.14 | ||||||||
| Granted | 1.6 | 195.27 | |||||||||
| Exercised | (1.7) | 123.12 | |||||||||
| Lapsed or canceled | (0.6) | 192.22 | |||||||||
Outstanding at December 31, 2023 | 13.4 | 153.86 | |||||||||
| Granted | 1.6 | 198.20 | |||||||||
| Exercised | (4.2) | 125.30 | |||||||||
| Lapsed or canceled | (0.4) | 195.71 | |||||||||
Outstanding at December 31, 2024 | 10.4 | 170.29 | |||||||||
| Awards transferred to Solstice at spin-off | (0.2) | 147.23 | |||||||||
| Adjustment to awards related to spin-off of Solstice | 0.6 | N/A | |||||||||
| Granted | 1.6 | 212.23 | |||||||||
| Exercised | (1.8) | 130.42 | |||||||||
| Lapsed or canceled | (0.4) | 178.87 | |||||||||
Outstanding at December 31, 2025 | 10.2 | $ | 172.62 | ||||||||
Vested and expected to vest at December 31, 20251 | 9.4 | $ | 172.06 | ||||||||
Exercisable at December 31, 2025 | 6.9 | $ | 163.04 | ||||||||
| 1 | Represents the sum of vested options of 6.9 million and expected to vest options of 2.5 million. Expected to vest options are derived by applying the pre-vesting forfeiture rate assumption to total outstanding unvested options of 3.3 million. | |||||||
The following table summarizes information about stock options outstanding and exercisable as of December 31, 2025:
| Range of Exercise Prices | Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||||||||||||||
| Number Outstanding (in millions) | Weighted Average Life1 | Weighted Average Exercise Price Per Share | Aggregate Intrinsic Value | Number Exercisable (in millions) | Weighted Average Exercise Price Per Share | Aggregate Intrinsic Value | |||||||||||||||||||||||||||||||||||
$93.56–$99.99 | 0.1 | 0.15 | $ | 93.56 | $ | 10 | 0.1 | $ | 93.56 | $ | 10 | ||||||||||||||||||||||||||||||
$100.00–$134.99 | 1.0 | 1.38 | 114.42 | 85 | 1.1 | 114.42 | 85 | ||||||||||||||||||||||||||||||||||
$135.00–$189.99 | 6.3 | 5.29 | 172.50 | 142 | 4.5 | 167.49 | 136 | ||||||||||||||||||||||||||||||||||
$190.00–$224.38 | 2.8 | 7.23 | 197.87 | 3 | 1.2 | 194.00 | 3 | ||||||||||||||||||||||||||||||||||
| 10.2 | 5.36 | $ | 172.62 | $ | 240 | 6.9 | $ | 163.04 | $ | 234 | |||||||||||||||||||||||||||||||
| 1 | Average remaining contractual life in years. | |||||||
There were 6.9 million and 9.6 million options exercisable at weighted average exercise prices of $157.58 and $138.24 as of December 31, 2024, and 2023, respectively.
The following table summarizes the financial statement impact from stock options exercised:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Intrinsic value1 | $ | 143 | $ | 357 | $ | 122 | |||||||||||
| Tax benefit realized | 33 | 76 | 27 | ||||||||||||||
| 1 | Represents the amount by which the stock price exceeded the exercise price of the options on the date of exercise. | |||||||
At December 31, 2025, there was $96 million of total unrecognized compensation cost related to non-vested stock option awards which is expected to be recognized over a weighted average period of 2.42 years. The total fair value of options vested for the years ended December 31, 2025, 2024, and 2023, was $48 million, $49 million, and $48 million, respectively.
RESTRICTED STOCK UNITS
RSU awards entitle the holder to receive one share of common stock for each unit when the units vest. RSUs are issued to certain key employees and directors as compensation at fair market value at the date of grant. RSUs generally become fully vested over periods ranging from to six years and are payable in Honeywell common stock upon vesting. Certain RSU awards are performance-based and awarded to eligible employees which entitle the grantee to receive shares of common stock if specified Company performance goals are achieved during the performance period and if the grantee remains employed through the vesting period.
The following table summarizes information about RSU activity for the three years ended December 31, 2025:
| Number of Restricted Stock Units (in millions) | Weighted Average Grant Date Fair Value Per Share | ||||||||||
Non-vested at December 31, 2022 | 2.7 | $ | 181.10 | ||||||||
| Granted | 1.1 | 194.81 | |||||||||
| Vested | (0.9) | 171.92 | |||||||||
| Forfeited | (0.3) | 187.13 | |||||||||
Non-vested at December 31, 2023 | 2.6 | 189.18 | |||||||||
| Granted | 1.0 | 200.44 | |||||||||
| Vested | (0.8) | 185.70 | |||||||||
| Forfeited | (0.3) | 191.68 | |||||||||
Non-vested at December 31, 2024 | 2.5 | 194.85 | |||||||||
| Awards transferred to Solstice at spin-off | (0.1) | 204.06 | |||||||||
| Adjustment to awards related to spin-off of Solstice | 0.1 | N/A | |||||||||
| Granted | 1.3 | 206.97 | |||||||||
| Vested | (0.8) | 191.73 | |||||||||
| Forfeited | (0.3) | 198.18 | |||||||||
Non-vested at December 31, 2025 | 2.7 | $ | 191.35 | ||||||||
As of December 31, 2025, there was approximately $264 million of total unrecognized compensation cost related to non-vested RSUs granted under the Company's stock plans which is expected to be recognized over a weighted average period of 1.77 years.
The following table summarizes the impact to the Consolidated Statement of Operations from RSUs:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Compensation expense | $ | 156 | $ | 142 | $ | 154 | |||||||||||
| Future income tax benefit recognized | 28 | 30 | 32 | ||||||||||||||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 11, 2022 | |
| 2020 | Feb 12, 2021 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.