HON Honeywell International Inc

By Ted Mann and Josh Beckerman 

Dave Cote will step down as chief executive of Honeywell International Inc. at the end of March, ending a 14-year tenure during which he revived the fortunes of the industrial conglomerate.

Mr. Cote, who turns 64 next month, will be succeeded by Darius Adamczyk, who was named the company's president and chief operating officer in April. Mr. Cote will continue as executive chairman through April 2018, and then start a five-year consulting and noncompete agreement.

"Darius thinks independently and has demonstrated that he can evolve business strategies to fit evolving circumstances -- a very important skill because the world is changing rapidly," Mr. Cote said in a written statement.

In an interview on Tuesday, Mr. Adamczyk said he would redouble the company's efforts to expand its software offerings for industrial customers. As industrial manufacturers evolve, Mr. Adamczyk said, organic sales growth will increasingly come from software that can help Honeywell's customers -- from airlines to petroleum refineries -- squeeze more efficiency out of their heavy machinery. "Software is going to be the medium by which that value is going to be delivered," he said.

Mr. Adamczyk's promotion in April was seen as a signal that he was in pole position to take over as CEO. As president and operating chief, the 50-year-old gained oversight for Honeywell's wide array of business units, which make products ranging from fire alarms and thermostats to automotive turbochargers and rubber boots for firefighters.

Before that, Mr. Adamczyk -- who joined the company eight years ago through an acquisition -- had been leading the performance materials business since 2014. A native of Poland and an engineer, Mr. Adamczyk earned an M.B.A. from Harvard University. He previously held executive roles at Ingersoll-Rand PLC and Metrologic Instruments Inc., a company Honeywell acquired.

Mr. Cote took the reins of Honeywell in 2002, when the New Jersey-based conglomerate was reeling in the aftermath of a bungled merger with Allied Signal and a failed deal to be acquired by General Electric Co. Under Mr. Cote, who cut his teeth at GE, Honeywell has turned into a comeback story.

Honeywell shares have risen nearly 200% over the past decade, compared with a 63% gain in the S&P 500 index. Honeywell shares rose 2.3% to $114.06 on Tuesday.

"Dave has been a passionate and transformative leader throughout his tenure at Honeywell, completely turning around the company from its initial state of disarray," said Jaime Chico Pardo, who was named Honeywell's lead director as part of the transition plan.

The company built a record of disciplined, well-executed midsize deals, expanding product lines in areas like personal protective equipment, building controls and mobile scanners without overpaying for targets. Key, Mr. Cote has said, was avoiding "fad-surfing" -- chasing competitors into new markets and overpaying in the process, as he felt other industrials had done.

This year, Mr. Cote changed his tune and attempted a megadeal, launching a $90 billion takeover bid for rival United Technologies Corp. that would have created an aerospace giant.

But the offer was rebuffed, and United Technologies executives publicly attacked the deal as an impossibility because of likely objections by regulators and big aerospace customers.

Mr. Adamczyk said the company also will continue to seek out acquisitions as it has in the past. "We have a great skill set," he said of Honeywell's deal team. "We exercise the right set of muscles."

Honeywell also announced a plan to overhaul its compensation for top executives. Mr. Pardo and Scott Davis, the chairman of the board's compensation committee "will be actively engaging with the Company's largest shareholders over the coming months" to consider changes, including making incentive pay for executives "mostly formulaic and less discretionary," the company said in a filing. Honeywell plans to announce the changes in compensation before issuing its 2017 proxy statement, the company said.

Write to Ted Mann at ted.mann@wsj.com and Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

June 28, 2016 19:30 ET (23:30 GMT)

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