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The Black & Decker Corporation


Corporate Governance
Policies and Procedures
Statement


A.           Introductory Statement


This Statement is adopted by the Board of Directors of The Black & Decker
Corporation to set out the policies and procedures by which the Board performs
its duties to direct the management of the Corporation as provided in the laws
of Maryland, to assure compliance with state and federal laws and regulations
and applicable rules of the New York Stock Exchange (NYSE), and to assure that
the Corporation acts effectively and efficiently in the best interests of its
stockholders and other constituencies.


B.           Board of Directors


1.           Membership


a.           Number.  As provided in the Bylaws, there shall be not more that 14
Directors and not less than 8 as the Board may provide by resolution from time
to time.


b.           Independent Directors.  Not less than three-quarters of the
Directors shall be “independent Directors” as defined in this section.


(1)           A Director is not independent unless the Board affirmatively
determines that the Director has no material relationship with the Corporation,
either directly or as a partner, shareholder, or officer of an organization that
has a relationship with the Corporation.  The Corporation will identify in its
annual meeting proxy statement which Directors are independent and disclose the
basis for the determination.


(2)           A Director is not independent if the Director is, or within the
last three years has been, an employee of the Corporation or an immediate family
member is, or within the last three years has been, an “executive officer” (as
defined in Rule 16a-1(f) under the Securities Exchange Act of 1934) of the
Corporation.  A Director who serves as an interim Chairman, Chief Executive
Officer (CEO) or other executive officer, however, may be deemed independent
immediately following that employment.


(3)           A Director is not independent if the Director or an immediate
family member has received from the Corporation, during any twelve-month period
within the last three years, more than $120,000 in direct compensation other
than Director and committee fees and pension or other forms of deferred
compensation for prior service that is not contingent on

 
 

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continued service.  Compensation received by the Director for former service as
an interim Chairman, CEO, or other executive officer and compensation received
by an immediate family member for service as an employee (other than an
executive officer) is excluded when determining independence under this
subsection.


(4)           A Director is not independent if (a) the Director is a current
partner or employee of the Corporation’s internal or external auditor, (b) the
Director has an immediate family member who is a current partner of the
Corporation’s internal or external auditor, (c) the Director has an immediate
family member who is a current employee of the internal or external auditor and
personally works on the Corporation’s audit, or (d) the Director or an immediate
family member was within the last three years a partner or employee of the
internal or external auditor and personally worked on the Corporation’s audit
within that time.


(5)           A Director is not independent if the Director or an immediate
family member is, or within the last three years has been, employed as an
executive officer of another company where any of the Corporation’s current
executive officers at the same time serves or served on that company’s
compensation committee.


(6)           A Director is not independent if the Director is a current
employee, or an immediate family member is a current executive officer, of a
company that has made payments to, or received payments from, the Corporation
for property or services in an amount that, in any of the last three fiscal
years, exceeds the greater of $1 million or 2% of the company’s consolidated
gross revenues.


(7)           The term “immediate family member” includes a Director’s spouse,
parents, children, siblings, mothers and fathers-in-law, brothers and
sisters-in-law, sons and daughters-in-law, and anyone (other than domestic
employees) who shares the Director’s home.
 
c.           Eligibility.
 
(1)           A Director shall not stand for re-election as a Director after
attaining the age of 75 years.
 
(2)           Unless requested by the Corporate Governance Committee to do so, a
Director shall not stand for re-election if there is a change in the Director’s
employment or principal business association.
 
(3)           A Director who is a full-time employee of the Corporation may not
serve on the board of directors of more than two other publicly held for-profit
corporations unless approved by the Board.  A non-management Director of the
Corporation may not serve on the board of directors of

 
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more than three other publicly held for-profit corporations unless approved by
the Board.
 
d.           Orientation.
 
(1)           Each newly elected Director who has not served previously on the
board of directors of a for-profit corporation listed on the NYSE will be
afforded an opportunity to attend, at the Corporation’s expense, an orientation
course provided by the NYSE when it becomes available.


(2)           Each newly elected Director shall be provided with a copy of the
Corporation’s Directors Handbook, which includes this Statement, financial
information, and other written materials appropriate to inform the Director
about the duties and responsibilities of being a Director and the nature of the
Corporation’s operations and businesses.
 
(3)           Each newly elected Director shall also be afforded an opportunity
(a) to meet with the CEO, the Chief Financial Officer (CFO), and the president
of each major business group to discuss the Corporation’s structure and
operations and (b) to visit the Corporation’s major facilities.
 
e.           Stock Ownership.  Within the later of three years of joining the
Board or three years of the adoption of this Statement by the Board, a Director
is expected to own shares of the Corporation’s common stock having a market
value of at least $220,000.
 
2.           Selection of Directors.


a.           Qualifications and Standards.  Although there are no specific
minimum qualifications that must be met by a candidate to be recommended to the
Board nor any specific qualities or skills that the candidate must possess, the
following are desirable.


(1)           Integrity.  A Director candidate should have proven integrity and
a record of substantial achievement.


(2)           Age.  A Director candidate should be old enough to exercise mature
judgment, but young enough to serve for several years.  Ordinarily, the
candidate should be between 45 and 60 years of age.


(3)           Experience.  Preferably, a candidate should be the active or
retired chief executive officer of a corporation that is publicly held and of
comparable size.  Presidents, chief operating officers, chief financial
officers, and other qualified and prominent individuals who have business acumen
and whose relevant background, training, and experience can be expected to
benefit the Corporation should also be considered.

 
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(4)           Judgment.  A candidate should have a reputation for sound business
judgment.  It is important that a candidate understands the role of the Board
and the workings of the Corporation in the current business environment.  A
candidate should be able objectively to appraise management’s plans, programs,
achievements, and shortcomings.


(5)           Character.  Candidates must inspire trust and confidence in other
Directors so that the Board can discharge its duties smoothly and efficiently.


(6)           Prestige.  A candidate should add to the prestige of the
Board.  This will enhance the Corporation's reputation and make future
recruiting easier.


(7)           Commitment.  A candidate should be able and willing to devote the
required amount of time to the Corporation’s affairs, including preparing for
and attending meetings of the Board and its committees and attending annual
meetings of stockholders.


(8)           No Conflicts.  A candidate may not have a conflict of interest
with the Corporation.  For this purpose, a candidate has a conflict of interest
if the candidate has a business relationship that would be required to be
disclosed in the Corporation’s proxy statement.  In addition, it is preferable
that the candidate qualify as an independent Director as defined in section
B.1.b of this Statement.


(9)           Representation.  A candidate must be committed to representing the
interests of stockholders generally and not the interests of a particular
stockholder or group of stockholders nor the interests of a particular group
whose interests are primarily non-economic or involve a social agenda.


b.           Procedure.


(1)           When a vacancy occurs on the Board or when the Board increases the
number of Directors, the Corporate Governance Committee will identify potential
candidates to fill the vacancy.


(2)           Background information on each candidate will be distributed to
the members of the Corporate Governance Committee.


(3)           The Corporate Governance Committee will screen recommended
candidates, and, if appropriate, make discreet inquiry to determine the
candidate's interest and availability.


(4)           Unless eliminated by the screening, the candidate's name will be
reported to the Board and the Board members will be asked for comments.

 
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(5)           One or more members of the Committee will meet with the candidate
and determine the candidate's suitability for the Board.


(6)           The approved candidate's name and biographical information will be
distributed to the other Directors at or in advance of the meeting preceding the
meeting at which the candidate will be proposed for election.


(7)           The full Board will act on the nomination.


(8)           The Committee will consider candidates proposed by one or more
substantial, long-term stockholders.  Generally, stockholders who individually
or as a group have held 5% of the Corporation’s common stock for over one year
will be considered substantial, long-term stockholders.


(9)           In considering candidates proposed by stockholders, the Committee
will apply the qualifications and standards stated in section B.2.a.
 
3.           Duties and Responsibilities.
 
a.           General.
 
(1)           Within limits defined by statute and the charter and bylaws of the
Corporation, the Board of Directors shall exercise general powers as the
governing body of the Corporation.  The Board is the final authority with
respect to the overall policies of the Corporation and with respect to the
approval of objectives and goals for the Corporation and the evaluation of
management’s performance in relation to those policies, objectives, and goals.
 
(2)           The day-to-day management of the business is delegated to the CEO
of the Corporation.
 
(3)           As trustees of the business, the Directors have a fiduciary
responsibility to the Corporation’s stockholders.  The Directors may also
consider the interests of the Corporation’s other constituencies such as its
employees, customers, and the communities in which the Corporation operates,
provided there are rationally related benefits accruing to the Corporation’s
stockholders.
 
(4)           Management has the responsibility to provide to the Directors all
information necessary or appropriate to enable the Directors to discharge their
duties and responsibilities.  Directors must be aware, at all times, that the
information that is presented to them is confidential pending its release to the
public.

 
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b.           Statutory Duties.
 
(1)           A Director shall perform his or her duties as a Director,
including duties as a member of a committee of the Board, (a) in good faith, (b)
in a manner that the Director reasonably believes to be in the best interests of
the Corporation, and (c) with the care that an ordinarily prudent person in a
like position would use under similar circumstances.
 
(2)           In performing his or her duties, a Director is entitled to rely on
any information, opinion, report, or statement, including any financial
statement or other financial data, prepared or presented by (a) an officer or
employee of the Corporation whom the Director reasonably believes to be reliable
and competent in the matters presented, (b) a lawyer, certified public
accountant, or other person, as to a matter that the Director reasonably
believes to be within the person’s professional or expert competence, or (c) a
committee of the Board on which the Director does not serve, as to a matter
within its designated authority, if the Director reasonably believes the
committee merits confidence.  A Director is not acting in good faith if the
Director has any knowledge concerning the matter in question that would cause
the reliance to be unwarranted.
 
c.           Specific Duties.
 
Specific duties include:
 
(1)           Acquisitions and Mergers.  With the advice of the Finance
Committee, authorize significant acquisitions and mergers, subject to approval
by the stockholders when necessary.
 
(2)           Budgets.  With the advice of the Finance Committee, review and
approve annual capital expenditure and charitable contributions budgets.
 
(3)           Bylaws.  With the advice of the Corporate Governance Committee,
review and approve changes in the Corporation’s Bylaws.
 
(4)           Committees.  With the advice of the Corporate Governance
Committee, elect or appoint, define the powers of, and dissolve committees of
the Board.
 
(5)           Dividends.  With the advice of the Finance Committee, determine
dividend policy and authorize the payment of dividends.
 
(6)           Employee Benefits.  With the advice of the Compensation Committee,
approve major compensation plans, including stock option plans and other
equity-based plans, and any significant changes to any of these, and, in the
case of equity-based plans, submit them to the stockholders for approval if
required by the rules of the NYSE.

 
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(7)           ­Ethical and Professional Standards.  With the advice of the
Corporate Governance Committee, adopt ethical and professional standards for the
Corporation and assure, through continuing review, that Directors, officers, and
employees act in accordance with established and accepted ethical and business
standards, including compliance with the Corporation’s Code of Ethics and
Standards of Conduct, a copy of which as amended from time to time is attached
to this Statement as Appendix 1, and, with the advice of the Audit Committee,
the Code of Ethics for Senior Financial Officers, a copy of which as amended
from time to time is attached to this Statement as Appendix 2.
 
(8)           Financial Transactions.  With the advice of the Finance Committee,
review and approve financial transactions as provided in the Board’s standing
resolution on Approval of Financial Transactions and the Corporation’s
Short-Term Investment Policy and review and approve registration statements and
other documents relating to the public sale of the Corporation’s securities.
 
(9)           Officers. With the advice of the Compensation Committee, elect
and, when appropriate, remove the CEO and other principal officers of the
Corporation, delegate management responsibility and authority to them, and,
through the Compensation Committee, monitor their performance and establish
their compensation.


(10)           Stockholders.  With the advice of the Corporate Governance
Committee, fix the date, time and place of all meetings of stockholders, fix the
record date for stockholders entitled to vote at each meeting of stockholders,
appoint management proxies and proxy solicitors, and call special meetings as
required.


(11)           Audit Committee Funding.   Cause the Corporation to provide
appropriate funding, as determined by the Audit Committee, for payment of
compensation to the Corporation’s independent auditor, compensation to any
advisors employed by the Audit Committee, and the administrative expenses of the
Audit Committee that are necessary or appropriate in carrying out its duties.
 
 
4.
Organization.

 
a.           Chairman.  At the first Board meeting following a meeting of
stockholders at which Directors were elected, the Board will elect a Chairman
from among its members who shall preside at all meetings of the Board and the
stockholders.
 
b.           Secretary.  The Secretary or an assistant secretary of the
Corporation will record the proceedings at all meetings of the Board except
that, during executive sessions of the Board from which the Secretary is
excluded, another person

 
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present shall be designated by the Chairman or Presiding Director to act as
secretary of the meeting.
 
c.           Presiding Director.  The non-management directors will elect a
Presiding Director from among the non-management directors for a one-year term
at the first Board meeting following a meeting at which Directors were elected
or at any meeting in order to fill a vacancy.  Directions as to how interested
parties may make their concerns known to the Presiding Director will be
disclosed in the Corporation’s annual meeting proxy statement.  The Presiding
Director receives an annual retainer of $35,000.
 
5.           Meetings.
 
a.           Attendance.  Each Director has a duty to attend, whenever possible,
all meetings of the Board and of each committee of which the Director is a
member.


b.           Regular Meetings.  The Board will meet, without notice, immediately
after each annual meeting of stockholders, and, subject to the notice provisions
of the Bylaws, in the months of February, July, October, and December on a day
and at a time designated by the CEO.


c.           Special Meetings.   Special meetings may be called, subject to the
notice provisions of the Bylaws, at any time by the CEO or any two Directors.


d.           Executive Sessions.  To allow full and candid discussion among
non-management Board members of matters important to the Corporation, the
non-management Directors (i.e., Directors who are not officers) shall meet in
executive session without management following the regular Board meetings in
February, July, and December.  (If there are one or more non-management
directors who are not also independent directors, the independent directors
shall meet in executive session at least once each year.)  The Presiding
Director shall preside, and, in the absence of the Presiding Director, the
non-management Directors present will choose a Presiding Director pro tem to
preside over the executive session.  Directions as to how interested parties may
make their concerns known to the non-management Directors as a group will be
included in the Corporation’s annual meeting proxy statement.
 
e.           Meeting Materials.  Agendas and meeting materials will be
distributed in advance of Board and committee meetings, and each Director has a
duty to review the materials prior to the meetings.
 
6.           Committees.
 
a.           General.


(1)           The Board, at its discretion, may appoint or elect from among its
members committees of one or more Directors to deal with particular

 
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areas of the Corporation’s activities and interests.  All members of committees
serve at the pleasure of the Board and may be removed by the Board at any time.


(2)           To the extent practicable, any matter requiring action by the
Board shall first be presented to the appropriate committee for consideration
and recommendation.


(3)           To the extent practicable, the CEO shall attend each committee
meeting unless the committee is meeting in executive session.


(4)           The CEO shall designate an officer, employee, or agent of the
Corporation to provide staff support to each committee.


(5)           Charters of the standing committees will be published from time to
time as required by rules of the Securities and Exchange Commission (SEC) or the
NYSE.


b.           Standing Committees.  There are five standing committees of the
Board:


(1)           Executive Committee,


(2)           Audit Committee,


(3)           Compensation Committee,


(4)           Corporate Governance Committee, and


(5)           Finance Committee.


c.           Special Committees.  Special committees may be appointed from time
to time by the Board to act upon such matters as the Board may commit to them.
 
d.           Membership.

 
(1)           The members of each standing committee are appointed (or, in the
case of the Executive Committee, elected) annually by the Board at its first
meeting following the annual meeting of stockholders.


(2)           A majority of each standing committee (and all of the members of
the Audit Committee, the Compensation Committee, and the Corporate Governance
Committee) shall be independent Directors as defined in section B.1.b of this
Statement.


(3)           The chairman of each committee is designated by the Board at the
time the committee is elected or appointed.

 
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(4)           Special committees may be created by resolution of the Board or
appointed by the Chairman of the Board.  They shall consist of the number of
Directors that the resolution creating the committee or the Chairman of the
Board in creating the committee shall provide.


(5)           Under normal circumstances, each Director shall serve on at least
one standing committee, and no Director shall serve as Chairman of more than one
standing committee.


(6)           Consideration should be given to rotating committee assignments at
approximately five-year intervals, but the Board recognizes that there may be
reasons to retain a particular Director on a particular committee for a longer
period.


e.           Committee Service Compensation.  In addition to the annual retainer
for serving as a Director, each Director who is not a full-time employee of the
Corporation receives:


(1)           An annual retainer of $10,000 for service on the Audit Committee,
$20,000 for service as chairman of the Compensation Committee or the Audit
Committee, and $10,000 for service as chairman of the Finance Committee or the
Corporate Governance Committee, prorated as of the date of appointment if the
appointment is made at other than an annual meeting of the Board; and


(2)           Reimbursement for reasonable expenses incurred in attending
committee meetings.


f.           Operation.  Each Committee:


(1)           Shall appoint a secretary who may, but need not, be a member of
the Committee;


(2)           Shall keep minutes of its proceedings;


(3)           May determine its own procedures;


(4)           May call upon the Corporation’s officers, employees, counsel,
auditors, and consultants and may retain at the Corporation’s expense other
professional advisers and consultants as it may choose;


(5)           May appoint subcommittees of its members to perform particular
functions on behalf of the Committee; and


(6)           May meet by telephone conference call or similar communications
equipment if all persons participating in the meeting can hear each other at the
same time.

 
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7.           Director Compensation.


a.           General.  Compensation of Directors is authorized from time to time
by resolution of the Board with the advice of the Corporate Governance
Committee.  Directors who are full-time employees serve without additional
compensation. Compensation, including compensation for service on a committee,
may be deferred as provided in The Black & Decker Non-Employee Directors Stock
Plan.


b.           Annual Retainer.  Directors who are not full-time employees of the
Corporation receive, as of the date of election or re-election to the Board, an
annual retainer of $220,000 payable one-half in shares of stock under the
Non-Employee Directors Stock Plan and the balance in cash.  A Director may elect
to receive all or any part of the cash portion in shares of stock.  A Director
who elects to receive all or any part of the cash portion in shares of stock and
defer receiving the shares under The Black & Decker Corporation Deferred
Compensation Plan for Non-Employee Directors shall be credited with shares
having a Fair Market Value (as defined in The Black & Decker Non-Employee
Directors Stock Plan) equal to 120% of the amount of cash deferred.  If a person
is elected a Director other than at an annual meeting of stockholders, the
compensation will be prorated as of the date when the Director was elected.


c.           Expenses.  The Corporation will reimburse Directors for travel on
behalf of the Corporation, including travel to attend meetings of the Board or
Board committees, and travel-related expenses.


d.           Insurance.  The Corporation provides $100,000 of term life
insurance for each non-employee Director.  The Corporation also provides
$200,000 of accident insurance coverage during each day that a non-employee
Director is traveling in connection with Corporate business.


8.           Access to Management and Independent Advisors.  The Board and each
Director shall have direct access at all times to members of management and,
preferably through the Audit Committee, to the Corporation’s independent
auditor.  The Board may retain at the Corporation’s expense such independent
consultants and advisors as it may choose.


9.           Annual Performance Assessment.  Under the oversight of the
Corporate Governance Committee, the Board shall conduct annually a
self-evaluation to determine whether it and its committees are functioning
effectively and take any action that it deems appropriate to improve its ability
to oversee and guide the Corporation.


10.           Communications from Stockholders.  In addition to the procedures
provided for any interested party to communicate with the Presiding Director
(section B.4.c) and the non-management Directors as a group (section B.5.d),
stockholders also may communicate with individual Directors or the whole Board
by sending communications, marked to show that they are stockholder
communications, in care of the Corporate

 
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Secretary.  If addressed to individual Directors, the communications will be
forwarded, unopened, to those Directors, and if addressed to the whole Board,
will be forwarded, unopened, to the Chairman of the Corporate Governance
Committee for review and appropriate dissemination.




C.           Charters of Standing Committees.


 
1.
Executive Committee Charter.



a.           Members.  The Executive Committee is composed of not less than five
members elected annually by the Board of whom the Chairman shall be one.  A
majority of the members shall be independent Directors as defined in section
B.1.b of this Statement.  Normally, the chairman of each of the other standing
committees will be elected a member of the Executive Committee.  The Bylaws
provide that in the absence of any member of the Executive Committee, the
members who are present at any meeting, whether or not they constitute a quorum,
may appoint a Director who is present to act in the place of the absent member.


b.           Functions.  During the intervals between the meetings of the Board,
the Executive Committee may exercise all of the powers of the Board in the
management and direction of the affairs of the Corporation subject to (1)
specific directions of the Board and (2) the Maryland General Corporation Law,
which provides that such a committee may not (a) declare dividends or other
distributions on stock, (b) issue stock other than pursuant to general authority
granted by resolution of the Board, (c) recommend to the stockholders any action
requiring stockholders' approval, (d) amend the Bylaws, or (e) approve any
merger or share exchange that does not require stockholder approval.  The
Executive Committee will also act in a general and advisory capacity to
management.


c.           Staff Support.  General Counsel; Corporate Secretary.


 
2.
Audit Committee Charter.



a.           Members.  The Audit Committee is composed of not less than three
members, appointed annually by the Board, each of whom (1) is an independent
Director as defined in section B.1.b of this Statement, (2) meets the
requirements of Section 303A(2) of the NYSE Listed Company Manual and Rule
10A-3(b)(1) of the SEC, (3) except fees for service as a Director or as a member
of a committee of the Board, accepts no other consulting, advisory, or other
compensatory fee from the Corporation, and (4) is not an affiliated person of
the Corporation or any subsidiary of the Corporation.  All members shall be able
to read and understand fundamental financial statements, including the
Corporation’s balance sheet, income statement, and cash flow statement. In

 
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addition, at least one member shall qualify as an “audit committee financial
expert” as defined by the SEC. A member may not serve simultaneously on the
audit committee of more than three public companies unless the Board determines
that the additional service will not impair the member’s ability to serve
effectively on the Corporation’s Audit Committee and discloses the determination
in the Corporation’s annual meeting proxy statement.


b.           Purpose.  The Audit Committee, among other things, assists the
Board in overseeing the integrity of the Corporation’s financial statements, the
Corporation’s compliance with legal and regulatory requirements, the independent
auditor’s qualifications and independence, and the performance of the
Corporation’s internal auditors and independent auditor.  The Committee is
directly responsible for the appointment, compensation, retention, and oversight
of the work of the independent auditor, who shall report directly to the
Committee.  The Committee also prepares a report to be included in the
Corporation’s annual meeting proxy statement as required by the rules of the
SEC.


c.           Functions.  The Audit Committee will:


(1)           Retain and terminate, on its sole authority, the Corporation’s
independent auditor and approve all audit engagements and the scope, fees, and
terms of each engagement.


(2)           Approve in advance any non-audit engagements of the independent
auditor permitted by Section 201 of the Sarbanes-Oxley Act of 2002 and assure
that the approval is disclosed in the Corporation’s periodic reports as required
by law.


(3)           At least annually, obtain and review a report by the independent
auditor describing the auditor’s internal quality-control procedures, any
material issues raised by the most recent internal quality-control review or
peer review of the auditor or by any inquiry or investigation by governmental or
professional authorities within the preceding five years with respect to one or
more independent audits carried out by the auditor, and any steps taken to deal
with any such issues, and (to assess the auditor’s independence) all
relationships between the independent auditor and the Corporation.


(4)           Require the independent auditor to provide a written statement of
all relationships between the auditors and the Corporation required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant’s communications with the Audit Committee
concerning independence.

 
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(5)           Evaluate the independent auditor’s qualifications, performance,
and independence, including review and evaluation of the lead partner of the
independent auditor, taking into account the opinions of management and the
Corporation’s internal auditors, and assure the rotation of the lead audit
partner, the reviewing audit partner, and other audit personnel as required by
law.


(6)           Receive and review reports of the independent auditor regarding
critical accounting policies and practices to be used, all material alternative
treatments of financial information within GAAP that have been discussed with
management, the ramifications of using the alternative disclosures and
treatments and the treatment preferred by the independent auditor, and other
material written communications between the independent auditor and management,
including any management representation letter, report on observations and
recommendations on internal controls, schedule of unadjusted differences, and a
listing of adjustments and reclassifications not recorded.


(7)           Present to the Board the Audit Committee’s conclusions with
respect to the independent auditor.


(8)           Meet to review and discuss the Corporation’s annual audited
financial statements and quarterly financial statements, including reviewing the
Corporation’s specific disclosures under “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” with management and the
independent auditor.


(9)           Review and discuss with management the financial statements in the
Corporation’s Annual Report on Form 10-K, discuss with the independent auditor
the matters required to be discussed by Statement on Auditing Standards No. 61,
and based on the review and discussion, recommend to the Board that the audited
financial statements be included in the Annual Report on Form 10-K.


(10)           Discuss earnings press releases and the general types of
information to be provided to securities analysts and rating agencies.  The
discussion of earnings press releases may be conducted without a meeting of the
Committee by the Chairman or the Chairman’s designee and any available members.


(11)           Discuss policies with respect to risk assessment and risk
management, including guidelines and policies that govern the process by which
risk assessment and risk management is undertaken and the steps management has
taken to monitor and control the exposures.


(12)           Periodically, meet separately with the CFO, the General Counsel,
the Controller, the General Auditor, and the independent auditor.

 
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(13)           Review regularly with the independent auditor any audit problems
or difficulties, including any restrictions on the scope of the independent
auditor’s activities or access to requested information, any significant
disagreements with management and management’s response.


(14)           Set clear hiring policies for employees and former employees of
the independent auditor.


(15)           Establish procedures for (a) receiving, retaining, and handling
complaints received by the Corporation regarding accounting, internal accounting
controls, or auditing matters, and (b) the confidential, anonymous submission by
employees of the Corporation of concerns regarding questionable accounting or
auditing matters.


(16)           Serve as a channel of communication between the Board and the
independent auditor.


(17)           At least annually, meet with the General Auditor to review the
internal audit organization, the adequacy of resources committed to the
function, the adequacy of the system of internal controls, procedures, and
programs, the results of activities, and the responsibilities, budget, and
staffing of the Corporation’s internal audit function.


(18)           Review significant accounting principles and financial statement
presentations, including any material changes in the Corporation’s selection or
application of accounting principles.  Review significant judgments made in
connection with the preparation of the financial statements, including any
material exposures and related reserves and any off-balance sheet structures.


(19)           Assess compliance of the Corporation’s CEO, CFO and Controller
with the Code of Ethics for Senior Financial Officers set out in Appendix 2 to
this Statement, report material violations to the Board, and recommend to the
Board appropriate action.


(20)           Review the expenses of the executive officers.


(21)           Report the Audit Committee’s charter, charter amendments, and
activities in the Corporation’s annual meeting proxy statement as required by
the rules of the SEC.


(22)           Review the certificates of the CEO and the CFO relating to the
annual and quarterly reports and monitor the establishment, maintenance, and
evaluation by the CEO and the CFO of the disclosure controls and procedures and
internal control over financial reporting required by the SEC.

 
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(23)           Quarterly, receive a report from the General Auditor regarding
any transactions that are out of the ordinary course of business between
Directors or executive officers and the Corporation.


(24)           Annually, adopt a schedule for discharge of the Committee’s
duties and responsibilities.


(25)           Review compliance with the provisions of the Corporation’s Code
of Ethics and Standards of Conduct (Appendix 1) dealing with conflicts of
interest, improper payments, and secret accounts.


(26)           As appropriate and at the expense of the Corporation, retain and
obtain advice and assistance from outside legal, accounting, or other advisors
without seeking Board approval.


(27)           Annually, review and reassess the adequacy of the charter of the
Audit Committee.


(28)           Annually, conduct an evaluation of the Audit Committee’s
performance.


(29)           Report regularly to the Board.


d.           Staff Support. CFO; Controller; General Counsel; General Auditor.


3.           Compensation Committee Charter


 
a.
Members.  The Compensation Committee is composed of not less than three members
appointed annually by the Board.  All members shall be independent directors as
defined in section B.1.b of this Statement.



 
b.
Purpose.  The Compensation Committee, among other things, assists the Board in
matters relating to executive compensation, establishes goals for the award of
incentive or performance-based compensation, administers the Corporation’s stock
option, restricted stock, and similar plans, and monitors the performance of the
executive officers.



 
c.
Functions.



(1)           Annually, review and approve goals and objectives relevant to
compensation of the CEO, evaluate the CEO’s performance in light of those goals
and objectives, and recommend to the independent members of the Board the CEO’s
compensation level based on that evaluation.


(2)           On an annual basis, conduct a review of the Corporation’s critical
personnel and organizational structure.

 
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(3)           On a continuing basis, maintain plans for succession in the
officer ranks to cover losses both by normal attrition and by premature death,
incapacity, or retirement.


(4)           Review and recommend to the Board the election and removal of
elected corporate officers.


(5)           On an annual basis, review the base salary of each executive
officer and discuss the performance of each officer in connection with that
review.


(6)           In addition to (1) above, review and recommend to the Board
salaries and benefits for the executive officers.


(7)           Review and make recommendations to the Board with respect to
incentive compensation plans and equity-based compensation plans.


(8)           Administer all short-term and long-term incentive compensation
plans and all equity-based plans.


(9)           Monitor compliance with the Corporation’s policy regarding stock
ownership by executives.


(10)           If a compensation consultant is to assist in the evaluation of
CEO or other senior executive compensation, retain and terminate the consulting
firm and approve the firm’s fees and other retention terms, all on the
Compensation Committee’s sole authority.


(11)           Annually in connection with the preparation of the Corporation’s
annual meeting proxy statement, review and discuss with management the
Compensation Discussion and Analysis and, based on that review, recommend to the
Board of Directors that the Compensation Discussion and Analysis be included in
the proxy statement, and produce the Compensation Committee Report to be
included in the proxy statement in accordance with applicable SEC rules and
regulations.


(12)           Annually, conduct an evaluation of the Compensation Committee’s
performance.


(13)           Report all significant actions to the Board at the next regular
Board meeting.


(14)           Annually, review the amount of fees paid to the compensation
consultant retained by the Compensation Committee.  The Compensation Committee
must approve any project work by such compensation consultant with estimated
fees in excess of $30,000.

 
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d.           Staff Support.  Senior Vice President--Human Resources; General
Counsel.


4.           Corporate Governance Committee Charter.


a.           Members.  The Corporate Governance Committee is composed of not
less than three members appointed annually by the Board.  All members shall be
independent directors as defined in section B.1.b of this Statement.


b.           Purpose. The Corporate Governance Committee, among other things,
identifies individuals qualified to become Directors, recommends to the Board a
slate of Director-nominees for the next annual meeting of stockholders,
recommends members of the standing committees, and develops and recommends to
the Board corporate governance principles.


c.           Functions.


(1)           Develop and recommend to the Board a set of corporate governance
principles to be set forth in this Statement, review this Statement on a
continuing basis, and recommend to the Board appropriate changes in this
Statement.


(2)           Propose to the Board at its December meeting a slate of Directors
for submission to the stockholders at their annual meeting.


(3)           Monitor Directors for independence as defined in section B.1.b. of
this Statement and report to the Board at its February meeting any relationships
that require a determination by the Board of materiality for reporting purposes.


(4)           Handle problems regarding Directors who because of physical or
mental condition or for other reasons become unfit to serve.


(5)           Review and recommend to the Board any appropriate changes in the
Corporation’s criteria for selecting new directors.


(6)           Consistent with the Qualifications and Standards stated in section
B.2.a, recommend candidates for election to the Board to fill vacancies and
participate in interviewing prospective candidates. The Committee shall have
sole authority to retain, terminate, and approve the compensation of search
firms to assist it in performing this function.


(7)           Review for compliance with Section 3 of Article II of the Bylaws
the nominations of director candidates made by stockholders and determine the
eligibility of each proposed nominee.

 
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(8)           Nominate annually members of the standing committees for
presentation to the Board at its annual meeting and, on a continuing basis,
recommend changes as appropriate.


(9)           Nominate a Presiding Director for presentation to the
non-management directors annually or when necessary to fill a vacancy.


(10)           Annually, review the Corporation’s Code of Ethics and Standards
of Conduct and compliance with the Code.


(11)           Review and recommend changes in compensation and benefits for
service on the Board and committees of the Board.


(12)           Monitor compliance with the Corporation’s policy regarding stock
ownership by Directors.


(13)           Oversee the annual self-evaluation of the Board and the
evaluation of management.


(14)           Conduct an annual evaluation of the Corporate Governance
Committee’s performance.


(15)           Report all significant actions to the Board at the next regular
Board meeting.


d.           Staff Support.  General Counsel; Corporate Secretary.


 
5.
Finance Committee Charter.



a.           Members.  The Finance Committee is composed of not less than three
members, appointed annually by the Board.  A majority of the members shall be
independent Directors as defined in section B.1.b of this Statement.


b.           Purpose.  The Finance Committee, among other things, monitors
generally the financial performance of the Corporation, recommends dividends,
reviews and recommends offerings of the Corporation’s securities, and reviews
the Corporation’s investments.


c.           Functions.


(1)           Review the Corporation’s financial policies and procedures.


(2)           Review operating and financial results.


(3)           Give financial advice to management.

 
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(4)           Consider and make recommendations to the Board regarding corporate
financing and the issuance and sale of the Corporation's securities.


(5)           Review annual operating budgets and review and recommend to the
Board annual capital expenditure budgets and charitable contributions budgets.


(6)           Review purchases of fixed assets (including capital leases) and
sales of fixed assets (including land and buildings) and act upon them in
accordance with the Board’s standing resolution on Approval of Financial
Transactions.


(7)           Consider and make recommendations to the Board on dividends.


(8)           Review and act upon borrowings and prepayment of borrowings in
accordance with the Board’s standing resolution on Approval of Financial
Transactions.


(9)           Review mergers, acquisitions, divestitures, and similar
transactions in accordance with the Board’s standing resolution on Approval of
Financial Transactions.


(10)           Annually review and ratify all investments (defined as total
assets less inter-company accounts receivable and non-guaranteed third party
accounts payable) in "high risk" countries, and review and recommend to the
Board investments in "high risk" countries in accordance with the Board’s
standing resolution on Approval of Financial Transactions.
 
(11)           Oversee generally the provisions of and operations of the various
pension plans and similar benefit programs and operating pension committees of
the Corporation and its subsidiaries.  Specifically:


(a)           Periodically review the investment policies and management of
major pension funds.


(b)           Annually, review funding levels of non-insured defined benefit
plans.

 
d.           Staff Support.  CFO; Treasurer.


D.
Officers.



1.           Evaluation of the CEO.  With the advice of the Compensation
Committee, the Board will conduct annually, in executive session, a formal
evaluation of the CEO.  The review will be based on the accomplishment of goals
and objectives established by the

 
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Compensation Committee.  The evaluation will be communicated to the CEO by the
Chairman of the Compensation Committee.


2.           Management Development and Succession Planning.  With the advice of
the Compensation Committee, the Board will review annually the Corporation’s
plans for management development and succession planning for key executive
positions.


3.           Communications with Media and Others.  The CEO is responsible for
all communications with the media, the financial community, and similar external
entities pertaining to the affairs of the Corporation.  Directors should refer
all inquiries from such entities to the CEO.


4.           Stock Ownership by Executives.


a.           Policy.  The Corporation encourages stock ownership by its
principal elected corporate officers to more closely align their interests with
those of the Corporation’s stockholders.


b.           Goal.  Each of the following officers is expected to own stock of
the Corporation having a market value equal to the multiple of his or her annual
salary as follows:
 

  (1)  
CEO:
5                        (2)  
Executive, Senior, and
             
Group Vice Presidents:
3                          (3)  
Vice Presidents:
2       

 
c.           Intermediate Goal. Until an officer owns at least 50% of the
minimum share ownership target, that officer is expected to retain 100% of the
“net shares” received under the Corporation’s stock-based compensation
plans.  Once an officer owns 50% of the minimum share ownership target, that
officer should retain at least 50% of the net shares until the minimum share
ownership target is met.  “Net shares” means the shares remaining after
deducting shares for the payment of taxes and after deducting shares for the
exercise price of stock options.


d.           Exception.  This policy does not apply to officers who have
attained 60 years of age.


E.           Business Practices.


1.           Code of Ethics and Standards of Conduct.  The Board has adopted a
Code of Ethics and Standards of Conduct, a copy of which, as amended from time
to time, is attached as Appendix 1.

 
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2.           Code of Ethics for Senior Financial Officers.  The Board has
adopted a Code of Ethics for Senior Financial Officers, a copy of which, as
amended from time to time, is attached as Appendix 2.
 
 
Adopted by the Board of Directors February 13­, 2003.
Amended February 12, 2004.
Amended October 21, 2004.
Amended December 9, 2004.
Amended February 10, 2005.
Amended April 20, 2006.
Amended July 20, 2006.
Amended February 8, 2007.
Amended April 19, 2007.
Amended October 17, 2007.
Amended December 13, 2007.
Amended February 14, 2008.
Amended October 16, 2008.
Amended February 12, 2009.


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{'dataset': 'atticus_contracts'}