Honeywell's Pension Underfunding Mea Culpa
Today's Honeywell investor presentation provided another example of the wholesale "kick the can down the road" mentality that has gripped America. And while this myopic approach to the future is fully expected out of the 218 patriots who voted to keep increasing America's debt ceiling, impending debt repudiation be damned, such a shallow view has traditionally not been expected out of corporate America. Until now.
On page 12 of its investor presentation, Honeywell, demonstrating the PR savvy of your run-off-the-mill prebuscent, explains its pension funding shortcomings...by highlighting the deficits of others. Sorry, Honeywell, but this is not a Mac vs PC ad campaign. As the chart below demonstrates, Honeywell has a total underfunded status of almost $4 billion. Yet, "Honeywell is not an outlier" - as if this is supposed to make things all rosy somehow. Just maybe another way of reading this data is that the entire industry is screwed, with over $20 billion in underfunded pensions, or -18% in underfunding as a percentage of all pension liabilities.
Or maybe Honeywell's management team is making the Too Big To Fail case. Of course, in that case it needs to crank up its pension underfunding to surpass GE on an absolute basis and DHR on a relative one. Because where it stands now, Honeywell's troubles are merely Lehman-like in their systemic threat status. And we all know what happened to Lehman.
Then again, just as Social Security is the supremely unfixable black hole, so are corporate pension plans. Just like taxpayers have given up hope that the US budget will ever make sense when accounting for the nearly $100 trillion in non federal debt liabilities, so have HON's investors (and all others) given up pretending to worry about such trivial issues as pension plan underfunding. After all there are stock gains to be had today; in a few years not only the company but the entire economy will be gone... so who cares?
h/t Geoffrey Batt