Compensation and Benefits
   UTC employs over 200,000 people worldwide and provides compensation and benefits programs that are competitive
in local markets. UTC provides quality, affordable benefit programs to its employees as part of their total compensation package. The value of these company-sponsored benefit programs can be 25 percent or more of an employee’s pay. Benefits, and the value provided, vary country by country due to differences in local customs and laws. The most common types of company-sponsored benefits are health care and retirement programs. The company first introduced a retirement plan in 1941 to help its employees build the financial security required to enjoy retirement. Today, the UTC Employee Retirement Plan is a valuable part of an employee’s overall benefits package.
   Additionally, UTC provides defined contribution savings plans for retirement benefits. These plans offer a number
of investment options. In the United States, a common stock fund is available to all employees and the company contribution for salaried employees is made to the Employee Stock Ownership Program (ESOP). UTC employees participating in the savings plan currently hold 7 percent of stock outstanding and are our largest base of shareowners. These programs mean that when our business performs well, employees benefit.

Work Force Relations
   Approximately 75 percent of our domestic production and service work force is represented by a union. UTC and its businesses always negotiate in good faith with various unions over wages, hours, and terms and conditions of employment at locations where employees have chosen to be represented by a union. On an international basis, where labor organizations are present and our employees have chosen representation, we work with those organizations as appropriate under applicable local requirements. In 2004 we successfully negotiated all union contracts up for renewal.

Achieving Work-Life Balance
   UTC strives to offer our employees the opportunity to strike the right level of work-life balance. Our Lifechoices program is a comprehensive resource and referral program to help U.S. employees manage their work and personal lives. Lifechoices utilization rates have increased steadily, from 3.2 percent of UTC employees using the service in 1995 to a utilization rate of 15.6 percent of UTC employees in 2004.
   We believe this program significantly improves productivity, resulting in employees who are more focused and energized. The most-utilized Lifechoices service is child care assistance. Other issues garnering frequent requests include adult services, education issues and elder care.

Professional Development
   Our learning and development program offers all U.S. employees both online and classroom learning opportunities through the Web-based UTC Learning Portal. The Learning Portal features an online course catalog, a fully automated registration system and interactive career assessment and development tools. During 2004, 27,500 employees completed 95,000 registrations on the Learning Portal. Since 1999 Web-based training enrollments have increased from 3 percent of total enrollments to nearly 50 percent in 2004.

Executive Development
   UTC executives and emerging leaders are nominated to attend one- to two-week programs at the University of Virginia Darden School of Business for customized leadership, strategic thinking and business training. Since their inception, there have been 36 programs, with 1,855 participants. In 2004 there were five programs with 209 participants.