ITT Corporation

Corporate Governance Principles and Charters

Role of the Board of Directors
Board of Directors Selection and Composition
Board Operation and Structure
Meeting Procedure
Board Leadership and Relationship to Senior Management
Board Committees
Director Independence

Role of the Board of Directors
The Board of Directors of ITT Corporation, an Indiana corporation, is elected by the Company's shareholders to oversee the actions and results of management. In discharging its responsibilities, the Board of Directors will act in the best interests of the Company and its shareholders. Indiana law also provides that the Board of Directors may consider, among other pertinent factors, the effect of its actions on the Company's employees, customers, suppliers and communities in which the Company operates.

The Board of Directors sets policy for the Company and advises and counsels the Chief Executive Officer and senior executives who manage the Company's business and affairs.

The Board of Directors is responsible for reviewing and approving the Company's long term strategies, significant investments in new businesses, joint ventures and partnerships and significant business acquisitions including assessment of balance sheet impacts and other financial matters. The Board of Directors also reviews the Company's operating plans and capital, research and development and engineering budgets.

The Board of Directors is responsible for assuring that:
- There is continuity of leadership;
- Management develops sound business strategies;
- Adequate capital and managerial resources are available to implement the business strategies adopted;
- The Company's systems of financial and internal controls are adequate;
- The Company's businesses are conducted in conformity with applicable laws and regulations; and
- The assets of the Company and its subsidiaries are utilized most effectively and capital expenditures and appropriations are reviewed.
Board of Directors Selection and Composition
Directors of the Company shall be persons of integrity, with significant accomplishments and recognized business stature, who will bring a diversity of perspectives to the Board of Directors. The Board has responsibility for reviewing its membership on a regular basis to assure that it possesses appropriate skills and characteristics. The Board of Directors shall consider all relevant facts and circumstances in evaluating the independence of its members from management. Immaterial business transactions conducted in the ordinary course of business shall not be determinative of the issue of independence.
1. Membership Criteria
  Board members should possess such attributes and experience as are necessary to provide a broad range of personal characteristics including diversity, management skills, and technological, business and international experience.
2. Election of Directors
  In an uncontested election any Director nominee who receives less than 50% of the votes cast shall promptly provide a written resignation to the Chair of the Nominating and Governance Committee.
  - The Nominating and Governance Committee shall promptly consider the resignation and all relevant facts and circumstances concerning the withhold vote, including whether the cause of the withhold vote may be cured and the best interests of the Company and its shareholders. After consideration, the Nominating and Governance Committee shall make a recommendation to the independent directors of the Board.
  - The independent directors of the Board will act on the Nominating and Governance Committee's recommendation at its next regularly scheduled Board Meeting or within 90 days after certification of the shareholder vote, whichever is earlier.
  - The Board will promptly publicly disclose its decision and the reasons for its decision.
  - Any Director who tenders a resignation shall not participate in the Nominating and Governance Committee recommendation or Board action regarding whether to accept the resignation offer.
  - If each member of the Nominating and Governance Committee receives less than 50% of the votes cast at the same election, then the independent Directors who receive more than 50% of the votes cast shall appoint a committee among themselves to consider the resignation offers and recommend to the Board whether to accept the offers. However, if the only Directors who receive 50% or more of the votes cast in the same election constitute three or fewer Directors then all Directors may participate in the action regarding whether to accept the resignation offers. If all Directors receive less than 50% of the votes cast at the same election, the election shall be treated as a contested election and the majority vote policy shall be inapplicable.
3. Service on Other Boards
  Directors must be able to devote the requisite time for preparation and attendance at regularly scheduled Board and Board Committee meetings, as well as be able to participate in other matters necessary for good corporate governance. Directors who are chief executive officers of publicly-traded companies shall not serve on more than two public company boards in addition to service on their own board. Other Directors shall not serve on more than four boards of publicly-traded companies.
4. Inside and Outside Directors A majority of the Board of Directors shall be composed of independent directors. An explanation of the independence standard used by the Company is included as part of these Governance Principles.
  1. Independence
    All members of the Audit, Compensation and Personnel, and Nominating and Governance Committees shall be independent from management.
  2. Former Chief Executive and Other Senior Officers
    If the Chief Executive Officer or other senior officer retires, resigns or tenders a resignation to the Company, he or she shall resign as a Director effective as of the same date he or she resigns, retires from, or otherwise ceases to be an employee, of the Company.
  3. Change of Outside Director's Current Position
    Outside Directors should submit a resignation to the Chairman of the Company if there is a material change in their principal occupation or affiliation, including retirement. There should be an opportunity for review of the continued appropriateness of membership on the Board of Directors in this situation, and a determination should be made as to whether or not to accept the resignation.
  4. Employee Directors
    In normal circumstances, only the Chief Executive Officer of the Company shall be a member of the Board of Directors. The Board of Directors may choose to elect another senior officer(s) to the Board in appropriate situations.
Board Operation and Structure
1. Private Sessions of Outside Directors
  Outside Directors (those not employed by the Company) shall meet privately on a regular basis during the year. The outside Directors will then brief the Chief Executive Officer regarding the private session discussions.
2. Board of Directors Performance Assessment
  The Board of Directors will maintain formal mechanisms to annually assess its contribution in governing the Company in order to enhance its performance. The Board members will use surveys to query individual directors about their observations and recommendations as part of regular board and committee assessments. Results of the assessment will also be used in evaluating skills and attributes desired in potential director candidates.
3. Term Limits; Retirement Age
  The Board of Directors has not established term limits. The Board of Directors believes long-term, experienced Directors provide continuity of leadership, perspective and understanding of the complex businesses of the Company. However, no Director shall stand for reelection after he or she has reached the age of seventy-two.
4. Board Compensation Review
  Senior management will periodically review the level of Company's Director compensation in relation to director compensation of companies of comparable size, industry and complexity. Changes to compensation will be proposed to the full Board of Directors for consideration. Board compensation shall be structured to align Directors' interests with those of the Company¡¥s shareholders, shall be composed in part of equity compensation, and shall be at a level commensurate to compensation paid to directors of companies of comparable size, industry and complexity.
5. Board Interaction with Institutional Investors, the Press or Other Third Parties
  Interactions with institutional investors, the press or other third parties are best handled by designated management representatives and the Chairman and Chief Executive Officer. Directors should refer inquiries to one of the designated individuals.
6. Director Share Ownership
  The Board of Directors has established Director share ownership guidelines for outside Directors. The guidelines provide for desired ownership levels at four times the annual retainer amount, which level may be attained over a five-year period. The Chairman and Chief Executive Officer's share ownership is subject to the share ownership guidelines for corporate officers.
7. Independent Presiding Director
  1. Governance Objective
    The Board of Directors recognizes the fundamental equality of each of its members. Each board member has an obligation to communicate, counsel and where appropriate, provide a counterpoint or balance to the Chairman and Chief Executive Officer or management and each Director’s views shall be accorded equivalent weight. The Board believes, however, that appointment of an Independent Presiding Director to act as a liaison between the Board and the Chairman will further enhance clear, open and consistent communication and information flow. The role of the Independent Presiding Director shall not lessen the importance of board members’ individual contributions and responsibilities.
  2. Appointment
    The Chairman shall appoint, on an annual basis, an Independent Presiding Director, subject to review and ratification by the full Board. It is the intention of the Board of Directors that the position of Independent Presiding Director will rotate on an annual basis.
  3. Independent Presiding Director Role
    1. Preside at all meetings of the board at which the Chairman is not present;
    2. Available to address concerns raised by other directors, senior executives or major shareholders;
    3. Communicate any issues or concerns to the full Board and the Chief Executive Officer;
    4. Assist the Chairman in developing appropriate schedules and agendas for board and committee meetings. It is the responsibility of the Committee Chairs and full Board to review and approve regular Committee and Board meeting schedules, agendas and to identify information desired with respect to agenda items. Special meetings may be called by the Chairman or one-third of the independent Directors at any time.
    5. Act on behalf of the Chairman and the Board, as a formal coordinating point for facilitating, canvassing, reconciling and communicating board issues, concerns and recommendations.
    6. With respect to matters involving the Company or its businesses, the Company spokesperson shall be its Chairman and Chief Executive Officer.
8. Director Orientation and Continuing Education
  The Board of Directors has established several channels for providing Directors with information about the Company and their responsibilities as Directors. New Board members participate in a director orientation program when they join the Company's Board. Board members are also provided opportunities for continuing education. Directors regularly receive corporate governance periodicals and are encouraged to attend continuing education courses of the Directors choosing. The Company pays for all expenses incurred by the Director with respect to such continuing education.
9. Board Authority to Hire> Advisors, Counsel or Experts;
  Consultation with Management The Board of Directors is expressly authorized to retain outside counsel, independent advisors or other experts and, as necessary, consult with any members of management to assist the Board of Directors in fulfilling its responsibilities.
Meeting Procedure
1. Selection of Items for Board Agenda
  The Chairman of the Board establishes the Board agenda for Board meetings. Agenda items include those items required for necessary corporate governance and operational oversight such as strategic plans and budgets. All Directors are encouraged to suggest topics for the agenda.
2. Board Material Distributed in Advance
  Information and materials that are important to the Board's understanding of the agenda items and business related topics will be distributed sufficiently in advance of the meeting to permit prior review. Management should structure material provided to the Board of Directors to assure it is concise and to the point. Highly confidential or sensitive maters may be presented and discussed without prior distribution of background material. It is desired that material be distributed one calendar week prior to the Board meeting.
3. Board Meeting Frequency and Schedule
  Board of Director meetings shall be held approximately every other month. Scheduled meetings shall be determined sufficiently in advance to accommodate Directors' calendars. Telephonic and special meetings shall be held as necessary.
4. Annual Corporate Strategy Meeting
  The Company's strategic plan, operating budget and research and development plans shall be discussed with the Board of Directors at least once each year.
5. Board Presentations and Management Attendees
  Management presentations and participation are encouraged to allow Directors to gain additional understanding and insight into the Company's businesses and related issues, and to obtain exposure to high potential senior managers. In addition, selected management representatives will function as liaisons for each of the Board committees for which they have subject matter expertise.
Board Leadership and Relationship to Senior Management
1. Selection of Chairman and Chief Executive Officer
  The Board of Directors is responsible for selecting the Chairman of the Company and the Chief Executive Officer. The Board of Directors will make this selection in the manner and utilizing the criteria it feels best serves the Company. The Chief Executive Officer is accountable to the Board of Directors for the overall performance of the Company.
2. Board Involvement with Regard to Compensation Matters for the Chief Executive Officer and Other Senior Management
  The Board will be provided with a thorough annual review with respect to compensation matters for the Chief Executive Officer; Chief Operating Officer (if applicable); Chief Financial Officer; General Counsel; Senior Human Resources Officer; Treasurer; Corporate Relations Director and Management Company Presidents. The Board of Directors will be apprised with respect to compensation actions for the remaining corporate officers.
3. Formal Evaluation of Chief Executive Officer
  Outside Directors, as part of the Compensation and Personnel Committee responsibilities, will perform an annual evaluation and set objectives for the Chief Executive Officer's performance. The evaluation will include objective criteria including business performance, accomplishment of long-term goals and development of management succession plans and such other matters deemed pertinent to performance. The Chief Executive Officer will be provided with specific goals for the ensuing year. The full Board of Directors shall be apprised annually of such matters. (One Director shall be selected by the Board of Directors to meet with the Chief Executive Officer to review the evaluative process.) Results of the annual evaluation will affect the Chief Executive's annual compensation.
4. Succession Planning
  The Chief Executive Officer, working with the Board of Directors, is responsible for developing and maintaining a process for succession planning with respect to the position of Chief Executive Officer and other key corporate officers and advising the Board. The Chief Executive Officer will report annually to the Board of Directors on succession planning for the Chief Executive Officer and senior management positions, including a discussion of assessments, leadership development plans and other relevant factors.
5. Management Development
  Management development programs for senior level positions should be discussed regularly with the Board of Directors by the Chief Executive Officer or his designee.
Board Committees
1. Number, Structure and Jurisdiction of Standing Committees
  There are currently four standing committees: Compensation and Personnel, Audit, Corporate Responsibility, and Nominating and Governance. Other committees may be established from time to time by a resolution passed by the majority of the Board of Directors. Jurisdiction for each standing Committee is described in the respective Committee charter.
2. Independence of Committee Members
  Members of the Audit, Compensation and Personnel, and Nominating and Governance Committees shall be independent Directors.
3. Committee Agendas
  The Chair of each Committee, in consultation with the Chief Executive Officer, Corporate Secretary and management liaison establishes the Committee Agenda.
4. Assignment and Rotation of Committee Members
  Committee chairs and membership should be rotated periodically to provide fresh points of view. Committee Chairs and members will be reviewed and approved by the full Board of Directors.
5. Frequency and Length of Committee Meetings
  The Committee Chair, in consultation with Committee members, the Chief Executive Officer and the management liaison, will set the frequency and length of Committee meetings.
Director Independence
An independent Director is one who is free of any relationship that would interfere with the exercise of independent judgment and, within the last 5 years:
1. Has not been employed by the Company in an executive capacity.
2. Has not been an advisor or consultant to the Company and has not been affiliated with a company or firm that is an advisor or consultant to the Company.
3. Has not been affiliated with a significant customer or supplier of the Company.
4. Has not had a personal services contract with the Company.
5. Has not been affiliated with a tax-exempt entity that receives significant contributions from the Company.
6. Has not been a familial relative of any persondescribed above.
7. Has not been part of an interlocking directorate in which an executive officer of the Company on whose board the Director serves is a member of the compensation committee of the company that employs the Director.

Corporate Governance Principles and Charters

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