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Ethics report

  1. 1. A PROJECT REPORT ON BUSINESS ETHICS AND CORPORATE GOVERNANCE ON “GENERAL ELECTRIC COMPANY”Submitted To: Mrs.Bhavika Batra Submitted By: Archana Shahi B-42 Vandana Monani B-14 Shraddha Patel B-1|Page
  2. 2. INTRODUCTIONPortland General Electric Company is an investor-owned utility engaged in the generation,transmission and distribution of electricity to industrial, commercial and residentialcustomers.Operating in 52 Oregon cities, Portland General Electric Company serves approximately825,000 customers, including nearly 100,000 commercial customers.PGE receives oversight from state and federal regulatory agencies, including the OregonPublic Utility Commission and the Federal Energy Regulatory Commission.As Oregons largest utility, the PGE service territory attracts major employers in diverseindustries, such as high technology and health care. Economic growth in northwest Oregoncontinues to fuel our customer growth rate.PGE has a diverse mix of stable generating resources that includes hydropower, coal and gascombustion, wind and solar, as well as key transmission resources. Our 13 power plants havea total combined generating capacity of 2,766 megawatts.By managing our own power plants in conjunction with the available power supplies on thewholesale market, management believes our fully integrated power supply operations providethe flexibility and efficiency necessary to effectively balance our power supply resources toachieve the lowest possible cost for customers.We began our business back in 1889, when a generator at Willamette Falls in Oregon Cityproduced power to light 55 street lamps 14 miles away in Portland - the first long-distancetransmission line in the nation.Welcome to PGE’s Code of Business Ethics and Conduct (Code of Ethics). This Code ofEthics, which has been approved by the PGE Board of Directors, expresses the principles,policies and practices every board member, officer and employee of Portland GeneralElectric Comp any and its subsidiaries (PGE or the Company) are expected to use whenconducting the Company’s business. It is not intended as an exhaustive list of the activities or2|Page
  3. 3. practices that guide the behavior of employees or that could affect the reputation andgoodwill of PGE’s business. All employees are expected to be aware of and follow theCompany’s Core Principles, Guiding Behaviors, Corporate Policy, and individualdepartments’ policies and practices. Your good judgment and discretion are essential indetermining appropriate conduct for any situation.Ethical concerns are rarely clear-cut. As an employee of PGE, it is your responsibility toidentify and work to resolve such concerns. It’s important to question any ethical situationsthat are not addressed in this Code of Ethics or that are not clear. In any situation where youare unsure of your actions, ask yourself if you would be comfortable with your actions beingfeatured as a major story in the next day’s news.3|Page
  4. 4. PGE’S CORE PRINCIPLES AND GUIDING BEHAVIORSCore PrinciplesPGE has six core principles that express what is important to our Company and whatour customers expect from us every day. They are:Safety and Health – We must provide a safe and healthy work environment that minimizesrisk to ourselves and our customers.Continuous Improvement – Electricity is one of the foundations of modern life. To meetand exceed our customers’ expectations, we must excel at the fundamentals, aim forexcellence in everything we do, and continuously improve.Ethical Business Practices – To be effective, we must act with the highest levels of honesty,integrity and compliance to earn and retain trust.Diversity – We value diversity. The more our organization reflects the communities weserve, and promotes inclusion, the more our organization will thrive.Community Investment – Making strategic investments in our communities strengthensthem and our business. We focus investments in education; customer safety and providing asafety net for people in need; and promoting a sustainable economy and environment.Environmental Stewardship – We sustainably manage our business in an environmentallyresponsible manner, acknowledging that environmental protection, social responsibility andsound business practices are one and the same.4|Page
  5. 5. Guiding BehavioursThe Guiding Behaviours is a set of values and perspectives that employees use to approacheveryday decisions and guide their behaviour in the workplace. By consistently modellingthese values, we generate a companywide ethical culture. As a PGE employee, you shouldintegrate these Guiding Behaviours into your daily work, and in part, measure your decisionsand behaviour against these ideals.Be Accountable – As employees, we have choices. We are held accountable for thosechoices. Accepting accountability as individual performers and for the performance of ourwork group can be a challenge. Being accountable in all aspects of our work, however, canmake a tremendous difference in the satisfaction we receive from our work and the results weachieve.Dignify People – If we fail to listen and really understand our PGE co-workers andcustomers, how can we expect them to hear us? An environment in which diverse voices arenot being heard can result in stagnation, a void of new ideas, lack of innovation and aninability to grow and change.Make the Right Thing Happen – There is no better time to begin creating a more action-oriented culture at PGE than now. Jumping in and helping to get a job done or initiatingchange will make you more effective. You have the power to influence others by stayingpositive and encouraging innovation, flexibility and creativity. Don’t wait for someone elseor some other time.Positive Attitude – At PGE, one of the greatest strengths we have is our positive attitude –an inner belief that success is achievable. It’s important we bring that attitude to ourindividual work and to our work as a team.Team Behaviour – Putting the needs of the broader group first is an attitude that, in the end,benefits everyone.Earn Trust – As employees we must keep our promises and commitments, be honest andstraightforward and deal with issues fairly and consistently. It is through these behavioursthat we will earn the trust of our co-workers and customers.5|Page
  6. 6. FAIRNESS IN THE WORKPLACEPGE is committed to providing a workplace free of unlawful discrimination, harassment andviolence. All forms of these behaviors in the workplace are strictly prohibited and will not betolerated. If you believe you have been subjected to any of these behaviors you should reportthe incident promptly.DiscriminationPGE is an equal employment opportunity employer. PGE makes hiring decisions based solelyon jobrelated criteria without regard to race, color, age, religion, national origin, medicalcondition (including pregnancy), disability, genetics, marital status, gender, sexualorientation, gender identity, veteran status or on any other basis prohibited by law. Thispolicy covers all aspects of the employment relationship.HarassmentPGE will not tolerate any form of harassment. Harassment can take many forms and includesany behavior that has the purpose or effect of creating an intimidating, hostile or offensivework environment or interferes with an individual’s work performance. Harassing conductincludes, but is not limited to: using derogatory nicknames or slurs; negative stereotyping;behaving in a threatening or intimidatingway; and verbal or physical conduct that degrades or shows hostility or hatred toward anindividual.Displaying or circulating written or graphic material that ridicules or shows hostility oraversion to an individual or group is also considered harassment. Forms of sexual harassmentinclude, but are not limited to: verbal harassment, such as unwelcome comments, jokes orslurs of a sexual nature; physical harassment, such as unnecessary or offensive touching orimpeding or blocking movement; and visual harassment, such as offensive posters, cards,cartoons, graffiti, drawings or gestures.6|Page
  7. 7. ViolencePGE prohibits any act or behavior against an employee, contractor, temporary worker, guest,visitor, or anyone else engaged in PGE business, that intimidates, threatens or causes harm topersons or property, or is violent in nature.If PGE is made aware of a threat of harm to an employee or employees, where prudent orrequired, PGE will attempt to notify those who are the intended recipient of the threat as wellas contact the appropriate authorities.Possession of weapons (other than pocketknives with a blade of four inches or less) ormaterials, substances or explosives that may be used to cause harm to persons or property isprohibited in the workplace or when on PGE business. This also applies to employees withconcealed weapons permits. Security employees are exempt from this prohibition.NepotismPGE does not allow nepotism. Nepotism is favoritism shown to a relative, domestic partneror spouse based on the relationship. Relatives, domestic partners and spouses will not betreated differently from other applicants for employment. However, the employment processrequires stricter scrutiny whenever an employee might be involved in a workplace decisioninvolving a relative, domestic partner or spouse. A person may not enter into or stay in aposition where that person exercises supervisory, appointment, promotional or grievanceauthority over a relative, spouse or domestic partner or otherwise creates a conflict of interest7|Page
  8. 8. CODE OF ETHICSCode of Ethics for Chief Executive and Senior Financial Officers.On March 14, 2006, the Board of Directors adopted the Code of Ethics for Chief Executiveand Senior Financial Officers, replacing in its entirety the PGE Accounting and ReportingCode of Ethics.PurposePortland General Electric Company (the "Company") is committed to conducting its businessin accordance with applicable laws, rules and regulations and the highest ethical standards ofbusiness conduct, and to full and accurate financial disclosure in compliance with applicablelaw. This Code of Ethics for Chief Executive and Senior Financial Officers ("Financial Codeof Ethics") is applicable to the Companys Chief Executive Officer, Chief Financial Officerand Controller (or persons performing similar functions) (together, the "Senior FinancialOfficers"). In addition to complying with this Financial Code of Ethics, Senior FinancialOfficers also must abide by the Companys Code of Business Ethics and Conduct and otherCompany policies and procedures that govern the conduct of its business (collectively, the"Company Policies"). The Company Policies set forth the fundamental principles and keypolicies and procedures that govern the conduct of all of the Companys directors, officersand employees in connection with the Companys business.Ethical standardsSenior Financial Officers are required to conduct themselves honestly, ethically and withabsolute integrity with respect to the Companys business, including accounting and financialreporting for the Company and, when acting at the request of the Company on behalf ofanother entity or enterprise to which the Senior Financial Officer owes a fiduciary obligation,with respect to accounting and financial reporting for that entity or enterprise. In addition, theleadership responsibilities of the Companys Senior Financial Officers include creating aculture of ethical business conduct and commitment to compliance, maintaining a workenvironment that encourages employees to raise concerns, and promptly addressing employeecompliance concerns.8|Page
  9. 9. Compliance with laws, rules and regulationsSenior Financial Officers are required to comply, and to cause the Company to comply, withthe laws, rules and regulations that govern the conduct of the Companys business and toreport any suspected violations in accordance with the section below entitled "Reporting ofViolations."Conflicts of interestA conflict of interest occurs when the private interests of a Senior Financial Officer interferein any way, or even appear to interfere, with the interests of the Company. The obligation ofSenior Financial Officers to conduct the Companys business in an honest and ethical mannerincludes the ethical handling of actual or apparent conflicts of interest between personal andprofessional relationships. A conflict situation can arise when a Senior Financial Officertakes actions or has interests that may make it difficult to perform his or her company workobjectively and effectively. Conflicts of interest also arise when a Senior Financial Officer, ora member of his or her family, receives improper personal benefits as a result of the SeniorFinancial Officers position in the Company. Before accepting any position or benefits,making any investment, participating in any transaction or business arrangement or otherwiseacting in a manner that creates or appears to create a conflict of interest with the Company, aSenior Financial Officer must comply with his or her reporting obligations under theCompanys Code of Business Ethics and Conduct.DisclosuresIt is Company policy to make full, fair, accurate, timely and understandable disclosure incompliance with all applicable laws and regulations in all reports and documents that theCompany files with, or submits to, the Securities and Exchange Commission and in all otherpublic communications made by the Company. Senior Financial Officers are required topromote compliance by all employees with this policy and to abide by Company standards,policies and procedures designed to promote compliance with this policy.9|Page
  10. 10. Reporting of violationsIf a Senior Financial Officer knows of or suspects a violation of applicable laws, rules orregulations or this Financial Code of Ethics, he or she must immediately report thatinformation to the Companys Compliance Officer, General Counsel, any member of theAudit Committee of the Board of Directors or any member of the Board of Directors. No onewill be subject to retaliation because of a good faith report of a suspected violation.Compliance with Financial Code of EthicsSenior Financial Officers must comply with this Financial Code of Ethics at all times. SeniorFinancial Officers will be requested periodically to certify that they are in compliance withthis Financial Code of Ethics.This Financial Code of Ethics is important and must be taken seriously by all SeniorFinancial Officers. The Board of Directors shall determine, or designate appropriate personsto determine, appropriate actions to be taken in the event of violations of this Financial Codeof Ethics. Disciplinary action, including, but not limited to, written notices or warnings,reprimands, demotion or reassignment, suspension with or without pay or benefits, ortermination, may result for those Senior Financial Officers who fail to comply with thisFinancial Code of Ethics. In determining what action is appropriate in a particular case, theAudit Committee of the Board of Directors or its designee may, but will not be required to,take into account all relevant information, including the nature and severity of the violation,whether the violation was a single occurrence or repeated occurrences, whether the individualin question had been advised prior to the violation as to the proper course of action andwhether or not the individual in question had committed other violations in the past.10 | P a g e
  11. 11. Waivers; AmendmentsIf any Senior Financial Officer would like to seek a waiver of this Financial Code of Ethics,he or she must make full disclosure of his or her particular circumstances to either theCompanys Compliance Officer or General Counsel. Such officer is responsible for making adetermination as to whether the request will be submitted to the Audit Committee for itsconsideration. Only the Audit Committee can approve a waiver of this Financial Code ofEthics.This Financial Code of Ethics may be amended from time to time by resolution of the Boardof Directors of the Company. Waivers of and amendments to this Financial Code of Ethicswill be publicly disclosed to the extent required by applicable law and regulations.No rights createdThis Financial Code of Ethics is a statement of certain fundamental principles, policies andprocedures that govern the Companys Senior Financial Officers in the conduct of theCompanys business. It is not intended to and does not create any rights in any employee,customer, supplier, competitor, shareholder or any other person or entity.11 | P a g e
  12. 12. OREGON PUBLIC UTILITY COMMISSIONThe Oregon Public Utility Commission (OPUC) regulates all aspects of PGE’s provision ofretail electricity services, including the rates, terms and conditions of service and access todistribution services by electricity service suppliers. PGE may not charge any rates for retailregulated services that are not approved by the OPUC and may not discriminate amongsimilarly situated customers.Environmental RegulationsPGE maintains an environmental policy to ensure it complies with all applicable laws andregulations while meeting the highest standards of environmental stewardship. Allemployees, officers and board members must understand and fully comply with all applicableenvironmental laws related to their part of the Company’s business and activities. PGEfacilities and operations are subject to a large variety of requirements that control airemissions, discharges of effluent and water, handling of solid and hazardous waste and theunintended or uncontrolled release of pollutants and hazardous substances to the air, water orland. Such a release, even if accidental, must be reported to your supervisor or managerimmediately. PGE is often required to report such incidents to governmental authorities.Antitrust LawsAntitrust laws can be complex, and it is impossible to describe them fully in any code ofethics. In general, antitrust laws prohibit agreements among competitors on matters such asprices, terms of sale and allocations of markets or customers. Courts can — and do — inferagreements based on ―loose talk,‖ informal discussions or the mere exchange betweencompetitors of information from which pricing or other collusion could result. Should youbecome aware of such situations, you should report them immediately.Political ActivitiesCorporate political activities, including political contributions, are governed by federal, stateand local laws and regulations. Political contributions include monetary donations to politicalparties or candidates, lobbying of legislators or public officials, use of employees.12 | P a g e
  13. 13. CONFIDENTIAL INFORMATIONDetailed and up-to-date information is increasingly important in how PGE conducts itsbusiness. As with any other asset — a power line, a truck or a computer — you areresponsible for protecting confidential information.Confidential Information and Trade SecretsSome of the information you receive in the course of your work is confidential. You mustprotect and prevent the disclosure of confidential information PGE entrusts to you, exceptwhen disclosure is authorized or legally mandated. You must also protect confidentialinformation provided by any customer, supplier or would-be supplier, including prices, termsand names of other sources of supply. Confidential information includes all proprietary ornon-public information that might be useful to others or harmful to the Company or itscustomers, if disclosed. Examples can include business concepts, trade secrets, lists of leadsor prospects, business and product plans, information about PGE’s business methods,computer programs, customer and employee information and more. You may not use anyconfidential information for your own benefit or the benefit of persons inside or outside PGE.Your obligation to protect from disclosure any confidential business information acquiredduring your service with PGE continues even after you leave the Company. You must notdisclose any confidential PGE information to a new employer or others after you leave theCompany. You also may not disclose your previous employers’ confidential information toPGE board members, officers or employees.Gathering Information About Other BusinessesIt is entirely proper to gather information about other businesses, including those we serveand those with whom we compete in various ways. You must never attempt, however, toacquire trade secrets or other proprietary information through unlawful or unethical means,such as theft, spying, bribery or breach of a non-disclosure agreement. You should be able toidentify the source of any information you acquire about another business.13 | P a g e
  14. 14. Trademarks, Copyrights and Other Intellectual PropertyPGE recognizes and respects the individual property rights of others. When using the name,trademarks, logos or printed materials of another company, you must do so properly and inaccordance with applicable law.Trademarks: PGE’s logos and the name Portland General Electric Company are examplesof Company trademarks. You must always use our trademarks properly and advise yoursupervisor or the Legal department of infringements by others.Copyright ComplianceBooks, articles, drawings, computer software and other such materials may be covered bycopyright laws. It is a violation of those laws to make unauthorized copies of copyrightedmaterials. Availability on an Internet website or the absence of a copyright notice does notnecessarily mean that materials are not copyrighted. The Company licenses the use of muchof its computer software from outside companies. In most instances, this computer softwareis protected by copyright. You may not make, acquire or use unauthorized copies of computersoftware.14 | P a g e
  15. 15. CORPORATE GOVERNANCECATEGORICAL STANDARDS FOR DETERMINATION OFDIRECTOR INDEPENDENCEPurposeThe Board of Directors has adopted the following categorical standards to assist it inevaluating the independence of each member of the Board. The standards describe varioustypes of relationships that could potentially exist between a Director and Portland GeneralElectric Company ("Company" or "PGE") and sets thresholds at which such relationshipscould be material. The standards are intended to comply with the listing standards of the NewYork Stock Exchange (the "NYSE Standards"). In applying the standards, "Company" or"PGE" refers to PGE and its direct and indirect subsidiaries.Categorical standardsRelationships to Company: A director is not independent if during the three fiscal yearspreceding the determination:1. The director is employed by the Company;2. An immediate family member of the director is an executive officer of the Company;3. The director receives more than $100,000 per year in direct compensation from the Company, other than director and committee fees (including fees in the form of shares, options to purchase Company shares or similar compensation) and pension or other forms of deferred compensation for prior service that is not contingent on any continued service; or4. An immediate family member of the director receives more than $100,000 per year in direct compensation from the Company, other than director and committee fees (including fees in the form of shares, options to purchase Company shares or similar compensation) and pension or other forms of deferred compensation for prior service that is not contingent on any continued service.15 | P a g e
  16. 16. Relationships to Auditor. A director is not independent if:1. The director is a partner or employee of, or is otherwise affiliated with, the Companysindependent auditor;2. An immediate family member of the director is a partner of, or is employed or otherwiseaffiliated in a professional capacity with, the Companys independent auditor; or3. During the three fiscal years preceding the determination, the director or an immediatefamily member of the director was (but no longer is) a partner or employee of the Companysindependent auditor and personally worked on the Companys audit within that time.Interlocking Relationships: A director is not independent if, during the three fiscal yearspreceding the determination, an executive officer of PGE is on the compensation committeeof the board of directors of a company which employs the director or an immediate familymember of the director as an executive officer.Relationships to Customers: A director is not independent if during the three fiscal yearspreceding the determination:1. The director is an executive officer or employee of a company that does business with PGEand the sales by that company to PGE or the purchases by that company from PGE(excluding sales of electricity under PGEs filed tariffs), in any single fiscal year during thedetermination period, are more than the greater of two percent of the annual consolidatedgross revenues of that company or $1 million; or2. An immediate family member of the director is an executive officer of a company thatdoes business with PGE and the sales by that company to PGE or the purchases by thatcompany from PGE (excluding sales of electricity under PGEs filed tariffs), in any singlefiscal year during the determination period, are more than the greater of two percent of theannual consolidated gross revenues of that company or $1 million.16 | P a g e
  17. 17. Indebtedness: A director is not independent if at the time of the determination:1. The director is an executive officer or employee of another company which is indebted toPGE or to which PGE is indebted, and the total amount of either companys indebtedness tothe other at the end of the last fiscal year is more than one percent of the other companystotal consolidated assets; or2. An immediate family member of the director is an executive officer of another companywhich is indebted to PGE or to which PGE is indebted, and the total amount of eithercompanys indebtedness to the other at the end of the last fiscal year is more than one percentof the other companys total consolidated assets.Relationships to Charities. A director is not independent if at the time of the determinationthe director serves as an executive officer or director of a charitable organization and theCompanys discretionary charitable contributions to the organization exceed the greater of $1million or two percent of that organizations total annual charitable receipts during its lastcompeted fiscal year. Neither the Companys automatic matching of employee charitablecontributions nor contributions from the PGE Foundation will be included in the amount ofthe Companys contributions for this purpose.17 | P a g e
  18. 18. The following Corporate Governance Guidelines have been adopted by the Board of Directors (the"Board") of Portland General Electric Company (the "Company") to assist the Board in the exerciseof its responsibilities. These Corporate Governance Guidelines are not intended to change or interpretany Federal or state law or regulation, including the laws of the State of Oregon, or the Articles ofIncorporation or Bylaws of the Company. These Corporate Governance Guidelines are subject tomodification from time to time by the Board.THE BOARD1) Role Of Directors:The business and affairs of the Company shall be managed under the direction of the Board.A director is expected to spend the time and effort necessary to properly discharge his or herresponsibilities. Accordingly, a director is expected to regularly attend meetings of the Boardand committees on which the director sits, and to review prior to meetings materialdistributed in advance for the meetings. A director who is unable to attend a meeting (whichit is understood will occur on occasion) is expected to notify the Chairman of the Board orthe chairperson of the appropriate committee in advance of the meeting.2)The Boards Goals:The Boards goal is to build long-term value for the Companys shareholders and to assure thevitality of the Company for its customers, employees and the other individuals andorganizations who depend on the Company.To achieve these goals the Board will monitor both the performance of the Company (inrelation to its goals, strategy and competitors) and the performance of the Chief ExecutiveOfficer, and offer him or her constructive advice and feedback. When it is appropriate ornecessary, it is the Boards responsibility to remove the Chief Executive Officer and to selecthis or her successor.18 | P a g e
  19. 19. 3).Selection of the Chairman of the Board:To the extent provided in the Companys Bylaws, the Board shall be free to choose itsChairman of the Board in any way that it deems best for the Company at any given point intime.4) Size of the Board:The Board believes that it should generally have no fewer than 5 and no more than 11directors. This range permits diversity of experience without hindering effective discussion ordiminishing individual accountability. The size of the Board could, however, be increased ordecreased by resolution of the Board, if determined to be appropriate by the Board. Forexample, it may be desirable to increase the size of the Board in order to accommodate theavailability of an outstanding candidate for director.a. Board Orientation and Continuing Education.The Company will provide new directors with a director orientation program to familiarizesuch directors with, among other things, the Companys business, strategic plans, significantfinancial, accounting and risk management issues, compliance programs, conflicts policies,the Code of Business Ethics and Conduct, these Corporate Governance Guidelines, principalofficers, internal auditors and independent auditors.The Company also encourages directors to attend outside director education programs andshall reimburse each director for the cost of attending one such program per year, includingthe cost of the program and reasonable related travel and lodging expenses. If the directorserves on the board of one or more other public companies, the director will seek to havesuch other companies share equally in the cost of attending such programs.19 | P a g e
  20. 20. DIRECTORSA) Selection of New Directors:The Board shall be responsible for nominating members for election to the Board and, inaccordance with the Companys Bylaws, for filling vacancies on the Board that may occurbetween annual meetings of shareholders. The Nominating and Corporate GovernanceCommittee is responsible for identifying, screening and recommending candidates to theBoard for Board membership. When formulating its Board membership recommendations,the Nominating and Corporate Governance Committee shall also consider advice andrecommendations from others as it deems appropriate.The Nominating and Corporate Governance Committee will consider candidatesrecommended by shareholders. In considering candidates submitted by shareholders, theNominating and Corporate Governance Committee will take into consideration the needs ofthe Board and the qualifications of the candidate. The Nominating and Corporate GovernanceCommittee may establish procedures, from time to time, regarding shareholder submission ofcandidates.B) Board Membership Criteria:The Nominating and Corporate Governance Committee shall be responsible for developingand recommending a set of criteria for selecting candidates to serve as directors of theCompany, and for periodically reviewing and suggesting changes to the criteria.The Nominating and Corporate Governance Committee may apply several criteria inselecting nominees. At a minimum, the Committee shall consider (i) whether the nominee hasdemonstrated by significant accomplishment in his or her field an ability to make ameaningful contribution to the Boards oversight of the business and affairs of the Companyand (ii) the nominees reputation for honesty and ethical conduct in his or her personal andprofessional activities. Additional factors which the Committee may consider include anominees specific experiences and skills, relevant industry background and knowledge,business judgment, time availability in light of other commitments, diversity, age, potentialconflicts of interest, material relationships with the Company and independence frommanagement and the Company. The Committee also may seek to have the Board represent a20 | P a g e
  21. 21. diversity of backgrounds, experience, gender and race and may consider such other relevantfactors that the Committee regards as appropriate in the context of the needs of the Board.Each director shall be expected, within a reasonable period of time following his or herelection to the Board, to own shares in the Company in an amount that is appropriate for suchdirectors financial circumstances.C) Other Public Company Directorships:In general, the Company does not have a policy limiting the number of other public companyboards of directors upon which a director may sit. However, the Nominating and CorporateGovernance Committee shall consider the number of other public company boards and otherboards (or comparable governing bodies) on which a prospective nominee is a member.Although the Company does not impose a limit on outside directorships, it does recognize thesubstantial time commitments attendant to Board membership and expects that the membersof its Board be fully committed to devoting all such time as is necessary to fulfill their Boardresponsibilities, both in terms of preparation for, and attendance and participation atmeetings. Each member of the Board will inform the Secretary of the Company and theChairman of the Nominating and Corporate Governance Committee before becoming amember of another board of directors or an officer of another company. Sufficient time willbe allowed before accepting such a position for the Company to determine whether anyinterlocking director or officer restrictions may apply, and for the Chairman of the Committeeto evaluate any impact on fulfilment of Board responsibilities.D) Directors Who Change Their Present Job Responsibility:The Board does not believe that directors who retire from, or change, the principal occupationthey held when they became a member of the Board should necessarily leave the Board.Promptly following such event, the director must notify the Nominating and CorporateGovernance Committee, which shall review the continued appropriateness of the affecteddirector remaining on the Board under the circumstances. The affected director is expected toact in accordance with the Nominating and Corporate Governance Committeesrecommendation following such review.21 | P a g e
  22. 22. E) Retirement Age:It is the general policy of the Company that no director having attained the age of 75 yearsshall be nominated for re-election or reappointment to the Board. However, the Board maydetermine to waive this policy in individual cases.F) Director Tenure:In connection with each director nomination recommendation, the Nominating and CorporateGovernance Committee shall consider the issue of continuing director tenure and take stepsas may be appropriate to ensure that the Board maintains an openness to new ideas and awillingness to critically re-examine the status quo. An individual directors re-nomination isdependent upon such directors performance evaluation, as well as a suitability review, eachto be conducted by the Nominating and Corporate Governance Committee in connection witheach director nomination recommendation.G) Retirement of Chief Executive Officer:The board of directors believes that, as a matter of general policy, when a Chief ExecutiveOfficer retires from the company, the Chief Executive Officer should also resign from theboard of directors. Therefore, as part of the Chief Executive Officers notification to the boardof directors of his or her retirement, the Chief Executive Officer shall also submit an offer ofresignation from the board of directors effective upon his or her retirement date.22 | P a g e
  23. 23. INDEPENDENCEA) Independence of the Board:The Board shall be comprised of a majority of directors who qualify as independent directors("Independent Directors") under the listing standards of the New York Stock Exchange (the"NYSE Standards"). No more than two management executives may serve on the Board atthe same time.The Board shall review annually the relationships that each director has with the Company(directly or as a partner, shareholder or officer of an organization that has a relationship withthe Company). Following such annual review, only those directors who the Boardaffirmatively determines have no material relationship with the Company (either directly oras a partner, shareholder or officer of an organization that has a relationship with theCompany) will be considered Independent Directors, subject to additional qualificationsprescribed under the NYSE Standards or applicable law. The Board has adopted thecategorical standards attached hereto as an Addendum to assist it in determining directorindependence. In the event that a director becomes aware of any change in circumstances thatmay result in the director no longer being considered independent under the NYSE Standards,the categorical standards or under applicable law, the director shall promptly inform theChairperson of the Nominating and Corporate Governance Committee.B) Lead Independent Director:If the Chairman of the Board is not an Independent Director, the Companys IndependentDirectors will designate one of the Independent Directors on the Board to serve as a leadIndependent Director (the "Lead Independent Director"). If the Chairman of the Board is anIndependent Director, then he or she shall be deemed the Lead Independent Director andshall perform the duties of the Lead Independent Director as set forth herein. The LeadIndependent Directors duties will include coordinating the activities of the IndependentDirectors, coordinating the agenda for and moderating sessions of the Boards IndependentDirectors and other non-management directors, and facilitating communications among theother members of the Board.23 | P a g e
  24. 24. In performing the duties described above, the Lead Independent Director is expected toconsult with the chairpersons of the appropriate Board committees and solicit theirparticipation in order to avoid diluting the authority or responsibilities of the committeechairpersons.C) Separate Sessions of Non-Management Directors:The non-management directors of the Company shall meet in executive session withoutmanagement on a regularly scheduled basis, but not less frequently than quarterly. TheChairman or, if the Chairman is not an Independent Director, the Lead Independent Directorshall preside at such executive sessions, or in such directors absence, another IndependentDirector designated by the Chairman or Lead Independent Director shall preside at suchexecutive sessions.In the event that the non-management directors include directors who are not independentunder the NYSE Standards, the Board will, at least once a year, schedule an executive sessionincluding only Independent Directors.Communications with Non-management Directors:Any interested parties desiring to communicate with the Lead Independent Director, theChairperson of the Audit Committee or the other non-management directors regarding theCompany may directly contact such directors.24 | P a g e
  25. 25. BOARD COMPENSATIONA director who is also an officer of the Company shall not receive additional compensationfor service as a director.The Company believes that compensation for non-employee directors should be competitiveand should encourage increased ownership of the Companys shares through the payment of aportion of director compensation in Company shares, options to purchase Company shares orsimilar compensation. The Compensation and Human Resources Committee will periodicallyreview the level and form of the Companys director compensation, including how suchcompensation relates to director compensation of companies of comparable size, industry andcomplexity. Such review will also include a review of both direct and indirect forms ofcompensation to the Companys directors, including any consulting or other similararrangements between the Company and a director. Changes to director compensation will beproposed to the full Board for consideration.A member of the Audit Committee may not receive any consulting, advisory, or othercompensatory fees from the Company or any subsidiary except directors fees (including feesin the form of shares, options to purchase Company shares or similar compensation and anyadditional amounts paid to chairpersons and members of committees of the Board); provided,however, that a member of the Audit Committee may also receive fixed amounts ofcompensation under a retirement plan (including deferred compensation) from the Companyfor prior service with the Company so long as such compensation is not contingent in anyway on continued service.25 | P a g e
  26. 26. DIRECTOR AND EXECUTIVE OFFICER STOCKOWNERSHIP REQUIREMENTSA) General:The Board believes that it is in the best interest of the Company, and its shareholders andcustomers, to require directors and executive officers to retain ownership of a substantialamount of Company common stock in order to: Create financial incentives that align the interests of directors and executive officers with strong operating and financial performance of the Company; Enhance the commitment of directors and executive officers to the long-term future of the Company and encourage executive officers to operate the business of the Company with a long-term perspective when appropriate; and Align the Companys governance practices with current best practices.In this regard, the Board has adopted minimum stock ownership requirements.B) Non-Employee Directors:Each non-employee director shall be required to own Company common stock with a marketvalue of at least three times the annual equity retainer fee. Each non-employee director shallmeet such requirement by the later of (i) March 31, 2015 or (ii) five years from the firstannual meeting at which such director is elected.Once a non-employee director reaches the stock ownership requirement under this provision(based on the then current stock price and share holdings), such director will remain incompliance despite future changes in stock price, as long as such director continues to ownthe minimum number of shares that brought the director into compliance with the stockownership requirement.In the event of an increase in the annual equity retainer fee for non-employee directors, non-employee directors who have already met the stock ownership requirement will only need toincrease their common stock ownership to reflect the amount of the increase in the annualequity retainer fee. In the event of such an increase, the Nominating and Corporate26 | P a g e
  27. 27. Governance Committee will determine the appropriate date by which non-employee directorsmust reach the new common stock ownership amount required by such increase.Until non-employee directors meet the stock ownership requirement described above, theymust retain an amount of shares equal to at least 50% of the net after-tax shares from thevesting or exercise of equity awards granted by the Company in payment of the directorsannual equity retainer fee. This retention requirement only applies to equity awards grantedafter October 26, 2011.C) Executive Officers:Minimum Ownership Amounts. The Chief Executive Officer is expected to retain 3x hisannual base salary in Company common stock. All other executive officers are expected toretain 1x their annual base salary in Company common stock. For purposes of thisrequirement, the executive officers of the Company shall include the Chief Executive Officerand all vice presidents.1. Transition Rules – Chief Executive Officer. If the Chief Executive Officer as of February16, 2011 (the effective date of this provision) has not reached the applicable share ownershiptarget, he is not required to acquire additional shares to meet such target, but is required toretain an amount of shares equal to 50% of the net after-tax shares (based on the statutorywithholding rate) acquired from vests of equity awards under the Companys long termincentive program, after February 16, 2011, until the share ownership target is reached. Inaddition, he is required to retain 100% of his shares that were vested as of February 16, 2011,until the share ownership target is reached. Once he has exceeded the share ownership target,he may dispose of shares, provided that he continues to meet the share ownership target.2. Transition Rules – Other Executive Officers. All other executive officers shall not besubject to any retention requirements with respect to shares vested as of February 16, 2011.This stock ownership requirement shall not restrict the ability of such executive officers tosell or otherwise dispose of such shares. If such an executive officer has not reached theapplicable share ownership target, he or she is not required to acquire additional shares tomeet such target, but is required to retain an amount of shares equal to 50% of the net after-tax shares (based on the statutory withholding rate), acquired after February 16, 2011,pursuant to vests of equity awards under the Companys long term incentive program. This27 | P a g e
  28. 28. requirement shall continue until such 50% of net after-tax shares is sufficient to meet theshare ownership target. Thereafter, the executive officer must retain an amount of sharessufficient to meet the share ownership target.3. Executive Officers Appointed after February 16, 2011. Executive officers appointed afterFebruary 16, 2011 shall not be subject to any retention requirements with respect to sharesvested as of the date of appointment as an executive officer, and this stock ownershiprequirement shall not restrict the ability of such executive officers to sell or otherwise disposeof such shares. If such an executive officer has not reached the applicable share ownershiptarget, he or she is not required to acquire additional shares to meet such target, but isrequired to retain an amount of shares equal to 50% of the net after-tax shares (based on thestatutory withholding rate) acquired, after the date of such persons appointment as anexecutive officer, from vests of equity awards under the Companys long term incentiveprogram. This requirement shall continue until such 50% of net after-tax shares equals orexceeds the share ownership target. Thereafter, the executive officer must retain an amount ofshares sufficient to meet the share ownership target.4. Reports Each executive officer shall annually report to the Corporate Secretary, as ofDecember 31 of each year, the number of shares of Company common stock held by suchexecutive officer.5. Changes in Stock Price or Base Salary Once an executive officer reaches the stockownership requirement under this provision (based on the then current stock price and shareholdings), such executive officer will remain in compliance despite future changes in stockprice, as long as such executive officer continues to own the minimum number of shares thatbrought him or her into compliance with the stock ownership requirement.In the event of an increase in the annual base salary of an executive officer who has alreadymet the stock ownership requirement, such executive officer will only need to increase his orher common stock ownership to reflect the amount of the increase in annual base salary. Inthe event of such an increase, the executive officer shall be required to retain an amount ofshares equal to 50% of the net after-tax shares (based on the statutory withholding rate)acquired, after the relevant measurement date, from vests of equity awards under theCompanys long term incentive program, until such time as the executive officer meets thestock ownership requirement.28 | P a g e
  29. 29. D) Amendments:The Nominating and Corporate Governance Committee and the Compensation and HumanResources Committee shall annually review the stock ownership requirements set forthabove, and the ownership of each non-employee director and each executive officer relativeto these requirements, and may recommend changes, as it deems appropriate, for approval bythe Board of Directors.E) Waivers:The Nominating and Corporate Governance Committee may grant waivers of thisrequirement in circumstances where a non-employee director or an executive officer wishesto sell shares of Company common stock because of financial hardship or other specialcircumstances, or as other otherwise deemed appropriate by the Nominating and CorporateGovernance Committee.Self-Evaluation by the BoardThe Nominating and Corporate Governance Committee will sponsor an annual self-assessment of the Boards performance as well as coordinate the self-evaluation of eachstanding committee of the Board. The results of the evaluations of the Board and the standingcommittees will be discussed with the full Board. The assessment should include a review ofany areas in which the Board or management believes the Board can make a bettercontribution to the Company. The Nominating and Corporate Governance Committee willutilize the results of this self-evaluation process in assessing and determining thecharacteristics and critical skills required of prospective candidates for election to the Boardand making recommendations to the Board with respect to assignments of Board members tovarious committees. The purpose of the evaluations is to assess the Boards and eachcommittees functioning as a whole, not to focus on the performance of individual Boardmembers.29 | P a g e
  30. 30. Strategic Direction of the CompanyNormally it is managements job to formalize, propose and implement strategic choices andthe Boards role to approve strategic direction and evaluate strategic results. However, as apractical matter, the Board and management will be better able to carry out their respectivestrategic responsibilities if there is an ongoing dialogue among the Chief Executive Officer,other members of top management and the Board. To facilitate such discussions, members ofsenior management who are not directors may be invited to participate in Board meetingswhen appropriate.Board Access to ManagementBoard members shall have access to the Companys management and, as appropriate, to theCompanys outside advisors. Board members shall coordinate such access through the ChiefExecutive Officer and Board members will use judgment to assure that this access is notdistracting to the business operation of the Company.Board Interaction with Institutional Investors, Analysts, Press and CustomersThe Board believes that management generally should speak for the Company. It is suggestedthat each director shall refer all inquiries from institutional investors, analysts, the press orcustomers to the Chief Executive Officer or his or her designee.Director Attendance at Annual Meetings of Shareholders.Directors are expected to attend theCompanys annual meeting of shareholders. A director who is unable to attend the Companysannual meeting of shareholders (which it is understood will occur on occasion) is expected tonotify the Chairman of the Board.30 | P a g e
  31. 31. BOARD MEETINGSA) Frequency of Meetings:There shall be not less than four regularly scheduled meetings of the Board each year. Atleast one regularly scheduled meeting of the Board shall be held quarterly.B) Selection of Agenda Items for Board Meetings:The Chairman of the Board, in consultation with the Lead Independent Director if separatefrom the Chairman of the Board, and the Chief Executive Officer shall annually prepare aBoard of Directors "Master Agenda." This Master Agenda shall set forth a general agenda ofitems to be considered by the Board at each of its specified meetings during the year.Thereafter, the Chairman of the Board, in consultation with the Lead Independent Director ifseparate from the Chairman of the Board, and the Chief Executive Officer may adjust theMaster Agenda to include special items not contemplated during the initial preparation of theannual Master Agenda.Upon completion, a copy of the Master Agenda shall be provided to the entire Board. EachBoard member shall be free to suggest inclusion of items on the Master Agenda as well asraise at any Board meeting subjects that are not specifically on the Master Agenda for thatmeeting.Matters management desires to submit to the Board shall be submitted through the CorporateSecretary who shall coordinate with the Chairman of the Board regarding the inclusion ofsuch matters on the agenda for a particular meeting.C) Attendance of Management Personnel at Board Meetings:The Board encourages the Chief Executive Officer to bring officers and other members ofmanagement from time to time into Board meetings to (i) provide management insight intoitems being discussed by the Board; (ii) make presentations to the Board on matters withinthe managers areas of responsibility; and (iii) bring officers and managers with significantcareer potential at the Company into contact with the Board. Attendance of such officers andmanagers at Board meetings is at the discretion of the Board. Should the Chief Executive31 | P a g e
  32. 32. Officer desire to add officers and managers as attendees on a regular basis, this should besuggested to the Board for its concurrence.D) Board Materials Distributed in Advance:Information and materials that are important to the Boards understanding of the agenda itemsand other topics to be considered at a Board meeting should, to the extent practicable, bedistributed sufficiently in advance of the meeting to permit prior review by the directors. Inthe event of a pressing need for the Board to meet on short notice or if such materials wouldotherwise contain highly confidential or sensitive information, it is recognized that writtenmaterials may not be available in advance of the meeting.32 | P a g e
  33. 33. COMMITTEE MATTERSA) Number and Names of Board Committees:The Company shall have the following standing committees: Audit Committee, Nominatingand Corporate Governance Committee, and Compensation and Human ResourcesCommittee. The purpose and responsibilities for each of these committees shall be outlined incommittee charters adopted by the Board. The Board may, from time to time, form newstanding or special committees and determine the composition and areas of competence ofsuch committees, or disband a current committee depending on circumstances.B) Independence of Board Committees:Each of the Audit Committee, the Nominating and Corporate Governance Committee and theCompensation and Human Resources Committee shall be composed entirely of IndependentDirectors satisfying NYSE Standards and any other applicable legal and regulatoryrequirements necessary for an assignment to any such committee. All other standing Boardcommittees shall be chaired by Independent Directors, unless the Board determines otherwisewith respect to a specific committee.C) Assignment and Rotation of Committee Members:The Nominating and Corporate Governance Committee shall be responsible, afterconsultation with the Chairman of the Board, and if separate from the Chairman of the Boardthe Lead Independent Director, for making recommendations to the Board with respect to theassignment of Board members to various committees. After reviewing the Nominating andCorporate Governance Committees recommendations, the Board shall be responsible forappointing the chairpersons and members to the committees on an annual basis.The Nominating and Corporate Governance Committee shall annually review the committeeassignments and shall consider the rotation of the chairpersons and members with a viewtoward balancing the benefits derived from continuity against the benefits derived from thediversity of experience and viewpoints of the various directors. With regard to thechairperson of the Nominating and Corporate Governance Committee, such position shallrotate at least once every five years.33 | P a g e
  34. 34. LEADERSHIP DEVELOPMENTA) Selection of the Chief Executive Officer:The Board shall be responsible for identifying potential candidates for, and selecting, theCompanys Chief Executive Officer. In identifying potential candidates for, and selecting, theCompanys Chief Executive Officer, the Board shall consider, among other things, acandidates experience, understanding of the Companys business environment, leadershipqualities, knowledge, skills, expertise, integrity, and reputation in the business community.B) Evaluation of Chief Executive Officer:The Nominating and Corporate Governance Committee will have responsibility foroverseeing the design of the process for the annual performance review of the ChiefExecutive Officer. The review should be timed to coincide with the annual evaluation of theChief Executive Officers performance and the determination and approval of compensationfor the Chief Executive Officer. The following steps will be utilized to carry out this review: The Chief Executive Officer will develop a self-evaluation at the end of each fiscal year and coordinate with the Nominating and Corporate Governance Committee to present this to the non-management members of the Board within one month of the end of the fiscal year. The Chief Executive Officers presentation may be delivered either orally or in writing. The non-management directors will meet with and without the Chief Executive Officer and provide their assessment of the Chief Executive Officers performance to the Compensation and Human Resources Committee. These assessments should include the directors appraisal of:1) The Companys performance and the Chief Executive Officers contribution to it, bothcompared to competitors and the Companys own strategic goals;2) Achievement of personal goals set by the Chief Executive Officer for the year, as part ofhis or her self-evaluation; and3) Other aspects of the Chief Executive Officers performance which the non-managementdirector deems relevant.34 | P a g e
  35. 35. The Independent Directors will complete the evaluation of the Chief Executive Officersperformance following the Chief Executive Officers presentation to the Board. Followingsuch evaluation, the Compensation and Human Resources Committee will determine andapprove, either as a committee or together with the other Independent Directors (if directedby the Board), the Chief Executive Officers compensation level based on such evaluation.C) Succession Planning:The Board shall plan for the succession to the position of the Chief Executive Officer. TheNominating and Corporate Governance Committee, either as a committee or together withthe full Board, shall annually review the Chief Executive Officer and senior managementsuccession plans. If the Nominating and Corporate Governance Committee conducts thisreview as a committee, it shall annually report to the Board on the results of its review.35 | P a g e