Describe your organization’s GOVERNANCE SYSTEM.

Describe HOW your organization addresses its responsibilities to the public, ensures ETHICAL BEHAVIOR, and practices good citizenship.

Within your response, include answers to the following questions:

1.2a. Organizational Governance

(1) HOW does your organization address the following KEY factors in your GOVERNANCE SYSTEM:

• accountability for management’s actions

• fiscal accountability

• transparency in operations and selection and disclosure policies for GOVERNANCE board members, as appropriate

• independence in internal and external audits

• protection of STAKEHOLDER and stockholder interests, as appropriate

(2) HOW do you evaluate the PERFORMANCE of your SENIOR LEADERS, including the chief executive?

HOW do you evaluate the PERFORMANCE of members of the GOVERNANCE board, as appropriate?

HOW do SENIOR LEADERS and the GOVERNANCE board use these PERFORMANCE reviews to improve both their personal leadership EFFECTIVENESS and that of your board and LEADERSHIP SYSTEM, as appropriate?

1.2b. Legal and Ethical Behavior

(1) HOW do you address any adverse impacts on society of your products, services, and operations?

HOW do you anticipate public concerns with current and future products, services, and operations?

HOW do you prepare for these concerns in a proactive manner, including using resource-SUSTAINING PROCESSES, as appropriate?

What are your KEY compliance PROCESSES, MEASURES, and GOALS for achieving and surpassing regulatory and legal requirements, as appropriate?

What are your KEY PROCESSES, MEASURES, and GOALS for addressing risks associated with your products, services, and operations?

(2) HOW does your organization promote and ensure ETHICAL BEHAVIOR in all your interactions?

What are your KEY PROCESSES and MEASURES or INDICATORS for enabling and monitoring ETHICAL BEHAVIOR in your GOVERNANCE structure, throughout your organization, and in interactions with CUSTOMERS and PARTNERS?

HOW do you monitor and respond to breaches of ETHICAL BEHAVIOR?

1.2c. Support of Key Communities

HOW does your organization actively support and strengthen your KEY communities?

HOW do you identify KEY communities and determine areas of emphasis for organizational involvement and support?

What are your KEY communities?

HOW do your SENIOR LEADERS and your employees contribute to improving these communities?

Notes:

N1. Societal responsibilities in areas critical to your business also should be addressed in Strategy Development (Item 2.1) and in Process Management (Category 6). KEY RESULTS, such as RESULTS of regulatory and legal compliance or environmental improvements through use of “green” technology or other means, should be reported as Leadership and Social Responsibility RESULTS (Item 7.6).

N2. Transparency in operations (1.2a[1]) should include your internal controls on GOVERNANCE PROCESSES.

N3. Leadership PERFORMANCE evaluation (1.2a[2]) might be supported by peer reviews, formal PERFORMANCE management reviews (Item 5.1b), and formal or informal employee and other STAKEHOLDER feedback and surveys.

N4. MEASURES or INDICATORS of ETHICAL BEHAVIOR (1.2b[2]) might include the percentage of independent board members, MEASURES of relationships with stockholder and non-stockholder constituencies, instances of ethical conduct breaches and responses, survey RESULTS on employee perceptions of organizational ETHICS, ETHICS hotline use, and RESULTS of ETHICS reviews and audits.

N5. Areas of community support appropriate for inclusion in Item 1.2c might include your efforts to strengthen local community services, education, and health; the environment; and practices of trade, business, or professional associations.

N6. The health and safety of employees are not addressed in Item 1.2; you should address these employee factors in Item 5.3.

For additional description of this Item, see 1.2 Governance and Social Responsibilities Item Description.

2005 Criteria Items (English): 1.1 - 1.2 - 2.1 - 2.2 - 3.1 - 3.2 - 4.1 - 4.2 - 5.1 - 5.2 - 5.3 - 6.1 - 6.2 - 7.1 - 7.2 - 7.3 - 7.4 - 7.5 - 7.6 - P.1 - P.2