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2011 report to employees and shareholders
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ActingIntegrity
Every Day
with
on the Job
E t h i c s a n d C o m p l i a n c e A n n u a l R e p o r t 2 0 1 1
®
2
Doing What’s Right … Every Time
Acting with integrity is the most important thing we can do
to assure the success of our company. That means knowing
what’s right and doing what’s right, in situations where the
law is there to guide us and in those where it is not.
Our Core Values
Operate Safely and Responsibly• This benefits us, our customers, our coworkers and the families
and friends who count on us
Maintain the Highest Ethical Standards• Conducting business with integrity and in full compliance with
the letter and spirit of the law• Doing what’s right• Communicating openly and honestly• Trusting our judgment and each other• Being accountable
Respect for Diversity• Welcoming the wealth of skills, knowledge and experience
found in our diverse marketplace, communities and region• Promoting an inclusive work environment• Demonstrating respect and fair treatment for all
Superior Customer Service• Providing courteous, resourceful and dependable care for
all of our customers – both in-house and externally
Providing a Stimulating Workplace• Promoting an environment that rewards innovative thinking,
teamwork, accountability and continuous performance improvement
Environmental Stewardship• Being environmentally responsible in all business decisions
and operations• Complying with both the letter and spirit of environmental-
protection laws and our own procedures
Contents
Conducting Business Ethically and with Integrity 3
Charles W. Shivery, Chief Executive Officer
Celebrating Stories About Integrity at Work 4
Jean M. LaVecchia, Chief Ethics Officer
Five Who Made a Difference 5
Others Honored During 8
Compliance & Ethics Week
Reinforcing Personal Accountability 11
Reporting Concerns: The BEACON Line 12
Case Studies: Five Types of Hotline Reports 14
Compliance Excellence Takes Teamwork 16
Samuel K. Lee, Chief Compliance Officer
Compliance: Our Framework 17
Ethics and Compliance Resources 19
Produced by Northeast Utilities’
Office of Ethics, Diversity and
Equal Employment Opportunity
Cheeneah M. Armstrong, Director
Christine A. Engel, Program Manager
Our Core Values
Doing What’s Right … Every Time
3
Leadership Message
Conducting Business Ethically and with Integrity
At the heart of our company’s success is our commitment to serve our customers and treat each other with integrity and the highest ethical behavior at all times.
Acting with integrity means we do what’s right – in situations where the law is there to guide us, and in those where it is not. With integrity, we earn one of the greatest assets a business can aspire to achieve: the trust of its employees, customers, shareholders and the communities we serve.
NU, its companies and its people have a reputation for integrity built on over 100 years of operation. Acting with integrity happens every day at NU. This report features fellow employees who have truly demonstrated the company’s core values in their behavior and actions in the course of doing their jobs.
Also in this report, you can learn more about NU’s Business Ethics and Compliance Operating Network (BEACON) Line, a confidential resource that is available 24/7 to answer questions or investigate reports of suspected wrongdoing or misconduct.
Each of us is obligated to report suspected ethics violations and to seek advice if we have questions or concerns about inappropriate behavior. In addition to the BEACON Line, there are a number of other avenues that are available to do so, including speaking with your supervisor, talking with your Human Resources business partner or contacting the Ethics, Diversity and Equal Employment Opportunity office.
Thank you for your steadfast commitment to maintaining NU’s high standards and conducting our business in a manner that is beyond reproach. Doing what’s right – ethically, fairly and honestly – is the key to our success.
Sincerely,
Charles W. ShiveryChairman, President and CEO
“Doing what’s right – ethically, fairly and honestly – is the key to our success.”
Chuck Shivery
4
Leadership Message
Celebrating Stories About Integrity at Work
At its most basic level, ethics means really caring about the outcomes of our choices and actions. Adhering to the letter of the law, along with ethical behavior, makes our compliance and ethics program effective.
Caring means treating each other with respect as well as being able to make decisions that may not be popular. It means keeping safety front and center and going the distance for customers. In essence, it means doing what is ultimately right by anyone with an interest in our business.
Nothing drives this home better than good real-life stories. Earlier this year, we asked company leaders for examples of employees whose personal decisions to do the right thing made a difference at work. It was extremely gratifying to see the wide variety of submissions.
Featured during “Making a Difference Awards” celebrated in Berlin, Conn., during Compliance and Ethics Week, and here, starting on the facing page, these examples help bring our ethics program to life. The program exists to do three things: define and build awareness of what is expected of you on the job, engage you in our shared responsibility to do what’s right and enable you to raise questions and concerns, knowing that the company will support you when you do.
A recap of activities that helped us continue to build momentum for the program last year, including new training initiatives on conflicts of interest, begins on page 11. Examples of the types of ethics cases handled through the BEACON Line are on page 14.
Our commitment to open and honest communication is an integral part of our ethical culture. Learning and sharing information, like our ethics stories, helps everyone better understand and do what’s right. Please feel free to share this report with coworkers, family and friends.
Jean M. LaVecchiaChief Ethics Officer
“Ethics means really caring about the outcomes of our choices and actions.”
Jean LaVecchia
5
Ethics Stories
Core Value: Maintain the Highest Ethical StandardsConducting business with integrity and in full compliance with the letter and spirit of the law.
While doing an internal review of IT Critical Infrastructure Protection (CIP) processes, David found a number of things that could be improved with regard to NERC (North American Electric Reliability Corporation) requirements.
This put him in a difficult position. The process improvement needs he identified could have a negative effect on his relationships with coworkers. Yet NU takes its responsibilities with NERC regulations very seriously and any problems with meeting requirements could result in monetary fines for NU.
David focused on NERC’s CIP requirements and appropriate corrective action. He shared what he learned during intense internal discussions, some with NU senior officers. Thanks to his perseverance, NU earned the highest score ever achieved in a NERC compliance audit.
In conjunction with National Compliance
and Ethics Week, May 1–7, NU’s
Ethics, Diversity and EEO Office asked
company leaders to submit stories
about employees whose behavior and
actions truly reflect our core values.
These five examples were featured
at our awards celebration on May 2nd.
Others honored during Compliance and
Ethics Week are listed on pages 8–10.
David Benton IT Architect NUSCO – IT Technology
Submitted by Bob Ciurylo
Five Who Made a Difference
6
Ethics Stories
Core Value: Superior Customer Service Providing courteous, resourceful and dependable care for all of our customers, both in-house and externally.
Sam is well known for taking the initiative in situations involving key NU stakeholder groups. He has participated in projects including the ISO New England Forward Capacity Market initiative, chaired the Connecticut Energy Efficiency Board’s Policy & Working Group and headed an NU project involving LED technology testing at UCONN.
When asked to serve as Safety Commander for the New Britain, Conn., facility last year, he tackled the job with his typical gusto. He learned all relevant company policies and procedures and successfully conducted many fire drills. When he noticed that the door to the facility’s main conference room didn’t have emergency exit features, he raised the issue with management, and a replacement was installed. He also volunteered to help revise the facility’s emergency preparedness disaster plan.
Core Value: Operate Safely and Responsibly This benefits us, our customers, our coworkers and the families and friends who count on us.
An initiative David took to equip fellow account executives with safety and first-aid gear had a broader-than-expected impact during the extreme winters of 2010 and 2011.
One January morning in 2010, as account executive Mark Massaro was driving to see a customer, he was among the first on the scene of an accident. A registered nurse also stopped but did not carry first-aid gear. Mark remembered that he had the safety bag David had provided in the car, and the nurse was able to take action until an ambulance arrived.
In February of this year, Jeff Plocharczyk, Manager – Account Executives, saw a car flipped over near the highway. A family with two young children was trapped inside. Jeff was able to help them out, and having sustained only minor injuries, they put the first-aid kit and emergency blanket to good use until additional help arrived.
David Noble Senior Account Executive CL&P Customer Relations & Strategy
Submitted by Walt Szymanski
Five Who Made a Difference
Sam Fankhauser Senior Energy Engineer Conservation & Load Management, CL&P Customer Relations & Strategy
Submitted by Cathy Lezon
Ethics Stories
Alex Quitno Line Mechanic Customer Operations CL&P Customer Operations
Submitted by Alan Price
Mike Viccaro Supervisor, Account ExecutivesCL&P Customer Relations & Strategy
Submitted by Jeff Plocharczyk
7
Core Value: Operate Safely and ResponsiblyThis benefits us, our customers, our coworkers and the families and friends who count on us.
When a Tolland CL&P crew arrived to restore power to a senior housing facility after a March storm, Alex took a simple step that helped assure the safety of everyone on the scene.
An underground transformer had blown, and in addition to the workers, town officials were on hand with questions. Alan Price, Manager – Organizational Effectiveness, on a field visit to the site, watched as Alex grabbed a shovel. It was a long walk from the transformer to the work crew’s truck, and Alex’s first priority was keeping the crew safe. “Alex took the time to spread dirt over the ice to mitigate the hazard,” Alan recalls. “It was a simple act of doing what’s right.”
Core Value: Maintain the Highest Ethical StandardsDoing what’s right.
Mike loves to cook but enjoys helping others even more. So he put his culinary talents to good use last year preparing home-cooked care packages for coworkers and their families who lost loved ones or were out on medical leave.
After a March 2010 wind storm hit southwest Connecticut extremely hard, Mike was designated as the town liaison for New Canaan. He quickly developed a good relationship with town officials. All worked tirelessly to help New Canaan recover, with few breaks in the action.
When Mike got an opportunity to head home for fresh clothes, he also managed to make some pizzas for the work team. His efforts gave a huge boost to morale, as well as energy.
Melissa FullerAccount Executive, Sales, Yankee Gas
Mainatain the highest ethical standards: Communicating openly and honestly.
Sandra GagnonConsumer Assistance AdministratorMarketing Support, PSNH
Superior customer service: Providing courteous, resourceful and dependable care for all of our customers, in-house and externally.
Odell HurdleConstruction RepresentativeEngineering and Construction—Stamford Infrastructure Upgrade, CL&P
Maintain the highest ethical standards: Being accountable.
Beth MaldonadoDirector, Purchasing, NUSCO
Respect for diversity: Welcoming the wealth of skills, knowledge and experience found in our diverse marketplace, communities and region.
Tom MaranoBusiness Development ConsultantEconomic Development & Community Relations, CL&P
Maintain the highest ethical standards: Doing what’s right.
Sandra NesciSupervisor, Regulatory Information ProcessingRegulatory Policy & Planning, NUSCO
Maintain the highest ethical standards: Conducting business with integrity and in full compliance with the letter and spirit of the law.
Ginny PiaSupervisor, Dispatch, Gas Systems Operations, Yankee Gas
Operate safely and responsibly at all times. This benefits us, our customers, our coworkers and the families and friends who count on us.
Others Honored During Compliance and Ethics Week— And the core value for which they were recognized
Ethics Recognition
8
Ethics Recognition
Susan ProvostScientist, Transmission Siting and Permitting, Transmission
Superior customer service: Providing courteous, resourceful and dependale care for all of our customers, in-house and external.
Dave SenetcenSupervisor, Gas System Mechanical ServicesGas Systems Operations, Yankee Gas
Operate safely and responsibly at all times.This benefits us, our customers, our coworkers and the families and friends who count on us.
Sheila SmithAccount ExecutiveCustomer Relations & Strategy, CL&P
Maintain the highest ethical standards: Being accountable.
Helen TaylorProject Siting and Permitting SpecialistTransmission Siting and Permitting, Transmission
Maintain the highest ethical standards: Doing what’s right.
Safety Incident Review Team John Dugan, Safety and Health Program Director, Safety
Denise Ducimo, Manager, Safety, CL&P
Gary Monte, Safety and Health Administrator
D. Sean Martin, Supervisor, Safety and Environmental, Transmission
Ed Pagani, Safety Supervisor, Yankee Gas
Doug MacDonald, Manager, Safety and Health, PSNH
Maintain the highest ethical standards: Conducting business with integrity and in full compliance with the letter and spirit of the law.
WMECo Business Services Group Louise Arnold, Senior Business Group Analyst
Meredith Blackburn, Senior Business Group Analyst
Joe Flaherty, Senior Business Group Analyst
Providing a stimulating workplace: Promoting an environment that rewards innovative thinking, teamwork, accountability and continuous performance improvement.
9
10
Ethics Recognition
CL&P and WMECo Tool Committee Maintain the highest ethical standards: Trusting our judgment and each other.
Mark A. Biron Tool Committee Champion
Greg Chamberlain Tool Committee Co-Chair
Ieva Higgins Corporate Purchasing, NUSCO Berlin Joseph Nesdale Tool Committee Co-Chair
CL&P Rob Back Madison, Conn. Bobby Bell New London, Conn. Jeff Brown New Britain, Conn. Steve Bruno Falls Village, Conn. Chris Calogero Newtown, Conn. Mat Charron East Hampton, Conn. John Haddad Norwalk, Conn. Mike Hartley Madison, Conn. Brandon Hyatt Simsbury, Conn. David Hynes Tolland, Conn. Scott Lindsay Norwalk, Conn. George Muttick Waterbury, Conn. Peter Neary Norwalk, Conn. Luis Negron Hartford, Conn. Jason Plourde East Hampton, Conn. Joe Quinones Middletown, Conn. Tim Reilly Waterbury, Conn. Richie Rogers Danielson, Conn. Dave Rose Stamford, Conn. Mark Sherman Danielson, Conn. Paul Smith Tolland, Conn. Paul Weske Newtown, Conn. Tony Wood Cheshire, Conn. Robert Zapata Hartford, Conn. John Zelanski Cheshire, Conn.
NUSCO Henry Cosker Berlin, Conn. Mike Jones Berlin, Conn. Rick Mosel Berlin, Conn. Andrew Nunes Berlin, Conn.
WMECo Ozvaldo Borreo East Springfield, Mass. Dan Chambrello East Springfield, Mass. John Connor East Springfield, Mass. Jon Faneuf Greenfield, Mass. Gary Fisher Hadley, Mass.William Gelinas East Springfield, Mass. Dick Golosh Hadley, Mass. Lyn Grippin East Springfield, Mass.Ken Kelleher East Springfield, Mass. Brien Scott East Springfield, Mass. Bill Smith Hadley, Mass.Jordan Williams Pittsfield, Mass.Ronald Williamson Greenfield, Mass.David York Greenfield, Mass.
Others Honored During Compliance and Ethics Week— And the core value for which they were recognized
Reinforcing Personal Accountability
Activities over the past year that helped employees
understand compliance and ethics issues included:
• Standards of Business Conduct (SBC) sessions for all new hires.
• SBC and NU Policies and Procedures leader training for Finance and Yankee Gas and ongoing refresher sessions for leaders in other groups.
• Quarterly sexual harassment prevention training for new supervisors, managers, team leads and senior-level employees (as required by Connecticut state law). Diversity and inclusion education sessions for those groups continued as well.
• Conflict of interest training and refresher sessions include policy review and practical examples that demonstrate how to apply the guidelines in the policies. The sessions were included in the CL&P Professional Engineering Development Program, a Conservation and Load Management all-hands meeting and a Customer Relations & Strategy Leadership meeting.
• Training for various levels of the organization on subjects including FERC, OSHA, environmental stewardship, purchasing, gas pipeline safety, FCPA (Foreign Corrupt Practices Act), e-mail communications, lobbying and contract administration.
Awareness-building activities included collecting and sharing examples of ethical behavior during Compliance and Ethics Week, and management communications reinforcing personal accountability for acting with integrity and complying with federal, state and local laws and regulations.
11
Training & Awareness
12
BEACON Line: Our 24/7 Hotline
Reporting Concerns: The BEACON Line
How It Works 1 Phone and web reports
received and documented by Global Compliance Services.
2 Ethics, Diversity & EEO Office notified; reviews and resolves issue, fulfills information request or channels issue as appropriate.
3 Ethics, Diversity & EEO Office or other functional group conducts interviews, reviews records/documents, contacts caller and others involved with additional questions (if necessary). If issue is outside BEACON Line scope, such as a contractual issue managed by the grievance process, it is referred as appropriate.
4 Corrective action taken (coaching, discipline, referral to management) or finding of no violation.
5 Report closed; reporter notified.
BEACON Line
Call
Ethics, Diversity and EEO Office Review
1
2
3
4
5
NU’s Business Ethics and Compliance Operating Network (BEACON)
Line is a confidential, anonymous reporting system available 24/7 to
take questions about or reports of possible illegal, unethical or improper
behavior as described in the company’s Standards of Business Conduct.
Individuals have a responsibility to report ethical or legal concerns and will not be subject to retaliation for doing so. Any form of reprisal because someone raised an allegation of wrongdoing in good faith is contrary to our culture and values and will not be tolerated.
Any employee who knowingly submits false complaints, reports or information will be subject to disciplinary action, up to and including termination.
Global Compliance Services
Investigation
Discipline, if appropriate
ReferralResolution
Report closed
Action, as appropriate
BEACON Line: 1-888-684-0909 or 1-877-576-2569 (TTY)
BEACON Line: Our 24/7 Hotline
*Actionable allegations are those determined to warrant investigation; substantiated allegations are those validated through the investigation process. Reasons allegations are not actionable include lack of sufficient information to follow up (anonymous calls).
13
2009 Calls 2010 Calls
Calls for guidance 26% 19%
Allegations 74% 81%
Of the allegation calls:
Actionable* 58% 70%
Substantiated* 14% 10%
All NU leaders are responsible for ensuring there is no retaliation against any employee for reporting a concern in good faith. Leaders should:
• Follow up with employees who raise concerns to be sure they have not experienced retaliation
• Protect the confidentiality of any employee who raises an issue
Su
bst
an
tiate
d R
ep
ort
s
NU
NU
Uti
liti
es
Uti
liti
es
33% 32% 31%
14%
36%
10%
Gen
era
l In
du
stry
Gen
era
l In
du
stry
2009 2009 20092010 2010 2010
Substantiated Allegations
Statistics Of the 140 contacts received in 2010, 19% were general inquiries and 81% concerned allegations of misconduct. In 2009, 145 calls were received; 26% were general inquiries and 74% concerned allegations of misconduct.
Actionable Allegations Seventy percent of the allegations contained sufficient information to conduct investigations. Of those, 10% were substantiated, resulting in coaching/counseling or in discipline. In 2009, 58% were actionable. Of those, 14% were substantiated.
The top three substantiated issue categories in 2010 were: • Workplace conduct • Harassment, intimidation, retaliation, discrimination • Use of technology/confidential information
In 2009 the top three substantiated categories were: • Workplace conduct • Immediate threat issues (workplace violence,
environmental spills) • Harassment, intimidation, retaliation, discrimination
BenchmarkingNU retains an external firm, Global Compliance Services, to maintain and monitor the BEACON Line and supply a quarterly report on how calls compare with benchmark averages.
The report also measures:• The percentage of anonymous reports• The percentage of substantiated reports versus medians
for the utility industry and industry in general
The most current report indicates that:• NU’s anonymous call rate was about the same as the
utility and general industry medians• Our substantiated rate is somewhat lower than
the utility and general industry medians
PerformanceIn 2010 over 95% of respondents reported satisfaction with the services provided by Global Compliance with regard to their concerns, response speed and courtesy. This high satisfaction rate has been consistent since the implementation of surveys to assess satisfaction levels began in 2007.
No
rth
east
Uti
liti
es
Uti
liti
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66%64% 65%
Gen
era
l In
du
stry
Anonymous Calls 2010
BEACON Line Benchmarking
BEACON Line: Our 24/7 Hotline
Initial follow-up indicates that the reporter may have witnessed favoritism. Along with other subordinates in the group, the reporter feels overlooked for opportunities to develop professional skills and for advancement.
NU’s Standards of Business Conduct (SBC) state that a conflict of interest may exist when there is a consensual romantic relationship between an employee and a supervisor, manager, director or officer with whom there is a direct or indirect reporting relationship.
After speaking with the supervisor, subordinate and others in the department, an investigator substantiates the allegation. Even in a consensual relationship, there are substantial risks of charges of sexual harassment or favoritism when supervision is involved.
The SBC also states that all management employees must maintain objectivity and impartiality when dealing with employee issues, regardless of the relationship. Since this is not possible, action must be taken to resolve the potential conflict of interest.
Treating each other fairly and with respect is one of NU’s core values and a competency integral to the company’s performance development process. Adapting interpersonal style to effectively interact with a variety of employees, so they feel valued, appreciated and included in discussions, is part of maintaining personal effectiveness.
The SBC state that all NU System employees and associates are expected to demonstrate trust, respect and consideration for others; respect the dignity of others; and refrain from harassing, intimidating, demeaning or offensive language or actions.
After speaking with the supervisor named and several employees in the department, an NU investigator substantiates this anonymous claim. On numerous occasions the supervisor’s level of agitation was a form of inappropriate behavior.
Case Studies: Five Types of Hotline Reports
In addition to the BEACON Line, NU receives allegations of potential misconduct through calls
to the ethics or compliance offices, or reports to supervisors, managers or HR Business Partners.
All are logged, tracked and investigated in the same manner.
Here are a few fictionalized examples of the types of cases reported. If these were real cases
and substantiated by investigators, appropriate disciplinary action and possibly measures
such as training or job reassignment, would be administered.
14
1
2
Conflict of InterestAn employee submits a concern
through the BEACON Line Web portal alleging that a
supervisor and subordinate had developed a romantic
relationship that was having a negative effect on others in the
department.
Workplace RelationsIn an anonymous report, an
employee names a supervisor and alleges a pattern of
verbal outbursts directed at subordinates, creating a hostile
work environment.
BEACON Line: Our 24/7 Hotline
The business partner who responded to the call finds issues warranting investigation, including remarks made on numerous occasions and allegedly made to other females in the department.
An investigator interviews the employees involved and determines the report to be substantiated due to the nature of the remarks and the pattern of repetition.
The SBC state: “Unwelcome sexual advances, requests for sexual favors and other unwelcome verbal or physical conduct of a sexual nature are specifically prohibited.”
The coworker, who has an excellent prior record with the company, acknowledges that his remarks crossed the line from complimentary to suggestive and contributed to a hostile work environment.
Separate discussions with the caller and the two employees indicate that the use of SameTime was personal in nature and therefore potentially inappropriate and excessive. Neither had considered it an issue since they communicate via text messaging so much off the job.
The investigator substantiates the allegation, noting that excessive conversational activity at work can have negative effects on job performance and coworkers. As stated in the SBC:
“Limited personal use of some company technology may be permitted, provided it does not interfere with normal work responsibilities. It is within management’s sole discretion to define the parameters of reasonable personal use.”
The SBC also note that all information conveyed by NU’s technology systems (e.g., telephones, computers, e-mail, radios, pagers, fax or copy machines) is the property of the company and may be monitored by authorized personnel at any time.
Follow-up on this call includes an interview with the caller and all other members of the crew. The investigator learns that the caller was not following appropriate procedures when the supervisor approached, and that the supervisor did indeed yell at the worker to correct the error.
Discussion with the other crew members confirms that the supervisor does not have a history of hostile behavior. The case is resolved as unsubstantiated.
15
3
4
5
HarassmentA female BEACON Line
caller reports that a male coworker made inappropriate sexual
comments to her during routine office activities over
several months.
Use of TechnologyA BEACON Line caller
reports that two employees are using SameTime
instant messaging excessively for non-
business conversations.
HarassmentA crew member calls the
BEACON Line and reports that he has been verbally
abused by a supervisor, that this constitutes harassment and that
it has created a hostile work environment.
16
Leadership Message
Compliance Excellence Takes Teamwork
High standards for personal integrity and for meeting federal, state and local laws and regulations have become hallmarks of our compliance and ethics program. We have all worked hard to make this happen, and our efforts show in the audits conducted by internal staff and outside groups.
One of my responsibilities as chair of NU’s Compliance and Ethics Committee is to report on the effectiveness of our compliance and ethics program to the committees of our Board of Trustees. We discuss what has been done throughout the organization to maintain a strong ethical culture, adhere to regulatory industry standards and maintain strong internal controls.
We track our program based on the 10 focus areas that parallel federal sentencing guidelines. Each is briefly discussed on the next few pages. This is our framework for everything from the tone senior management sets about doing what’s right, to compliance and ethics in day-to-day operations, to developing our training programs.
These evaluations affirm that we are doing many of the right things. But compliance requires continuous improvement as well. Everyone has a role in maintaining our high standards of ethical behavior. You can help by knowing what the focus areas are (starting on opposite page), identifying the ones that relate to your job, and thinking about how you, and we, can improve performance in those areas.
Your involvement really makes a difference, and enhances relationships with coworkers, customers, shareholders, suppliers and the communities in which we operate.
Samuel K. Lee Chief Compliance Officer
“Everyone has a role in maintaining our high standards of ethical behavior.”
Sam Lee
12345
Compliance: Our Framework
Ten Focus Areas
NU’s Compliance and Ethics Committee, comprised of leaders from each NU business
and many functional areas, oversees activities in 10 areas that parallel federal sentencing
guidelines for effective compliance and ethics programs.
Tone at the Top: Creating the right environment for doing what’s right.
Internal Controls and Assessment:Having the right reporting relationships and tools in place to monitor compliance and ethics.
Accountability at the Top:Assuring that company leaders take responsibility for having an effective compliance and ethics program.
Day-to-Day Operational Responsibility:Providing opportunity for compliance and ethics program leaders to report on and assess program effectiveness.
Qualifications for Personnel with Substantial Authority:Assuring that those responsible for the compliance and ethics program can do the job effectively.
17
Activities in 2010–2011 included establishing and communicating the Standards of Business Conduct to all employees, including CEO communication and reinforcement of the importance of ethical conduct and a commitment to compliance.
Work is ongoing to identify and implement internal controls, including an annual internal controls assessment by all managers, directors and officers and control-related audits by Internal Audit.
Trustees, executive officers and those in charge of major business or functional units take responsibility through various committee and subcommittee activities.
Those with day-to-day operational responsibility for the program report periodically on its effectiveness, resources, and have direct access to the company’s governing authority, including Trustees and Chief Compliance and Ethics officers.
NU excludes from substantial authority any individual the company knows, or should have known, has engaged in illegal activities or other conduct inconsistent with an effective compliance and ethics program (those with substantial authority include high-level personnel who exercise a substantial measure of discretion when acting on the company’s behalf).
18
Practice Response:Detecting violations, taking preventive steps and modifying programs to prevent recurrence.
Enforcement:Maintaining incentives and disciplinary processes that help make the compliance and ethics program effective.
Monitoring and Auditing:Following through to detect and deal with illegal or unethical behavior.
109876Training:
Conducting programs for all levels and functions as appropriate.
Risk Assessment:Gauging the likelihood of illegal conduct based on prior history and periodically updating the compliance and ethics program.
Ten Focus Areas
Compliance: Our Framework
In addition to ethics training programs listed on page 11, areas for compliance training are consistently reevaluated in response to reasessment of the company’s strategic and operational risks, changes in law or other developments affecting the company or the industry.
This includes evaluating the effectiveness of the compliance and ethics program, and maintaining and publicizing the BEACON Line that enables individuals to report allegations without fear of retaliation.
Employee performance reviews include an ethical behavior component, and the Compliance and Ethics Program is enforced through discipline delivered consistently throughout the company.
NU maintains a system to detect violations, track BEACON Line inquiries or reports, and modify the compliance and ethics program as appropriate.
NU’s risk-assessment activities span the organization and include audits and risk assessments from various functional units.
Ethics and Compliance Resources
Maintaining a culture with high ethical standards isn’t
just about company-driven programs. It’s about
personal commitment and going beyond good intentions
by understanding and adhering to company policies
and the law.
If you’re unsure how to handle a situation or have concerns about something you see in the workplace, ask questions.
Any employee who believes he or she has experienced retaliation should report the matter immediately.
NU resources include:
• Your supervisor, manager, director or vice president
• HR business partner
• The Office of Ethics, Diversity and EEO: 860-665-3894
• NU’s Corporate Compliance Office: 860-728-4623
• BEACON Line: 1-888-684-0909 or 1-877-576-2569 (TTY)
• www.compliance-helpline.com, username: NUEthics; password: BEACON
Additional tools and resources:
• NU Standards of Business Conduct: Online at http://nunet.nu.com/NUCorporate/MyJob/sbc/NU_SBC_Pub_2007.pdf, or in hard copy at field locations
• NU Policies and Procedures: Online at http://nunet.nu.com/NUCorporate/MyJob/policycentral/default.asp
19
Learn More About It
High ethical standards is about personal commitment... from every one of us.
ActingIntegrity
Every Day
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on the Job
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