Governance

At TE we understand that to become a great company we need a strong foundation of ethical behavior in addition to strong financial performance. Our ethical foundation is built on our core values:

Integrity

We must demand of ourselves and of each other the highest standards of individual and corporate integrity. We safeguard company assets. We comply with all laws and company policies. We are dedicated to diversity, fair treatment, mutual respect and trust.

Accountability

We honor the commitments we make, and take personal responsibility for all actions and results. We create an operating discipline of continuous improvement that is an integral part of our culture.

Teamwork

We foster an environment that encourages innovation, creativity, excellence and results through teamwork. We practice leadership that teaches, inspires, and promotes full participation and career development. We encourage open and effective communication and interaction.

Innovation

We recognize that innovation is the foundation of our business. We challenge ourselves to develop new and improved ideas for all that we do. We encourage, expect and value creativity, openness to change, and fresh approaches.

TE's Board of Directors is responsible for directing the management of our business units in the best interests of shareholders and in a manner that is consistent with good corporate citizenship. TE Board members select and monitor our top management, provide oversight for financial reporting and legal compliance, determine the company’s governance principles and implement governance policies. The Board, together with senior management, is also responsible for establishing our operating values and code of conduct and for setting strategic direction and priorities.

TE believes that good governance requires a set of specific practices and a culture of accountability throughout the organization. We also believe that good governance ultimately depends on the quality of its leadership, and we are committed to recruiting and retaining directors and officers of highest personal and professional integrity.

Our Board of Directors

Our Board provides management with strategic guidance, and ensures that management adopts and implements procedures designed to promote legal compliance and the highest standards of integrity and ethics throughout the organization.

The Board meets at least five times each year, and its committees more frequently. The CEO and Non-Executive Chairman arrange for senior managers to attend Board meetings and meet informally with Directors before and after the meetings.

To conduct its oversight function, the Board maintains three standing committees: Audit, Management Development and Compensation, and Nominating, Governance and Compliance. These committees are composed of independent directors.

Board Composition and Independence

Our Board is constituted to be strong in its collective knowledge and diversity of experience in accounting and finance, management and leadership, vision and strategy, business operations, business judgment, crisis management, risk assessment, industry knowledge, corporate governance, and global markets.

The Board is run by a non-executive chairman, and a substantial majority of Directors are independent. All Directors are annually elected by a majority of votes cast at the annual general meeting, and they serve for one-year terms. Members of the Nominating, Governance and Compliance Committee are responsible for the review of all Directors and Committees; and they base this review exclusively on overall performance.

Our Directors must meet a strict set of criteria, including demonstration of the highest ethical standards and integrity, a history of achievement that reflects superior standards for themselves and others, an ability to take tough positions while at the same time working as a team player, and individual backgrounds that exemplify a wide portfolio of experience and knowledge.

A number of procedures exist so that conflicts of interest for Directors are avoided. For example, Directors are required to limit their external directorships of other public companies based on their role in their own companies.

Executive Compensation

The Management Development and Compensation Committee, in collaboration with the Nominating, Governance and Compliance Committee, periodically reviews Directors’ compensation and recommends changes to the full Board. To help align Board and shareholder interests, Directors are encouraged to own TE’s stock or stock units equal to three times their annual retainer within three years of joining the Board. Directors who are Company Officers and employees of the Company receive no additional compensation for service as directors.

TE is committed to complying with applicable local, national and international laws and regulations that may affect the conduct of our business wherever we operate.

Guide to Ethical Conduct

We have structured our compliance program to emphasize ethical compliance and to make our core values a part of every employee’s job and an overall TE advantage. In 2007, we published our Guide to Ethical Conduct so that all TE employees understand how our core values of integrity, accountability, teamwork, and innovation relate to them, their jobs and particular concerns such as intellectual property protection and fair treatment of our employees. With clear language and easy-to-understand examples, the document provides our employees with a roadmap for demonstrating our values at the individual, team, and company-wide levels. In short, it’s a guide to help employees understand what is expected from them and to help them make good ethical decisions.

All employees are trained on the contents of the Guide, beginning with an initial orientation when employees join TE and through a re-certification process every year. Trainings are offered both online and in-person and are translated into 20 different languages. We also provide short videos about ethics accessible for employees in a variety of different formats. In 2010, more than 94 percent of employees completed the Guide re-certification.

Personal Training

We provide in-person ethics and risk management training to more than 10,000 employees every year with focus on higher-risk functions and countries. Our Ethics and Compliance and Law departments have also prepared a variety of specialized training programs that spotlight issues specific to certain higher risk countries we operate in, certain employee groups and businesses. These trainings include topics such as anti-bribery, fair treatment of employees and mutual respect, and avoiding conflicts of interest. Starting in late 2010, TE began assigning advanced compliance and ethics courses dependent on job function – for example, all employees in sales must take a course titled, “Ethical Selling”.

Our training incorporates real-life situations in which there are not necessarily right or wrong answers – the so called “grey zone.” The idea behind this approach is to stimulate candid discussions among employees; which we have found helps bring out cultural nuances and allows employees to understand our core values even better.

Timely Reporting of Non-Compliance

We encourage timely reporting of non-compliance with our Guide or policies, particularly to ethical conduct. We take seriously all reports of possible violations and address them promptly through the Ombudsman—a TE employee who acts as an independent, impartial and confidential resource for employees, suppliers, investors and customers to raise and address any potential violations of laws, policies, regulations or ethics.

Employees are strongly encouraged to report issues to their supervisor, Human Resources, Law Departments, or the Ombudsman Office. All reports of possible violations are taken seriously and investigated promptly through the coordination of the Ombudsman Office. All communications regarding possible violations are handled anonymously by telephone, via the toll-free global ConcernLINE, or via the TE ConcernNet website, which employees can contact the Ombudsman anonymously, if they wish. We have a non-retaliation policy, and if an employee has raised an issue in good faith, or has cooperated in an investigation, that cannot be the basis for denial of benefits, termination, demotion, suspension, threats, harassment or discrimination.

Reports and Inquiries in 2010

In fiscal 2010, employees made 588 reports or inquiries to the Ombudsman Office. Investigated cases fell into a variety of categories, including non-compliance with company policies, conflicts of interest and general employment questions. While some of these complaints did not require investigation, they provided good opportunities for discussion with management about employee concerns. Additionally, we often decide to create an action plan stemming from concerns raised even when the specific concern is not substantiated.

Managing operations, expertise and capabilities across a global enterprise can be a challenging proposition. With thousands of products under development by thousands of employees around the world—especially in emerging markets where regulatory environments are still developing—various local issues and problems can create risk to our company.

Our Approach to Enterprise Risk Management

Our approach to risk management is based on a rigorous risk assessment process. Oversight for this process starts at the top with Senior Management and the Nominating, Governance and Compliance Committee of our Board of Directors. This Committee, in conjunction with the full Board, conducts annual reviews and assessments of the effectiveness of the Company’s enterprise-wide risk assessment processes and recommends improvements where appropriate.

The assessment process is overseen by a steering committee which includes the company’s vice president of internal audit, head of security, a Risk Manager, a senior manager from Human Resources, and an IT compliance professional. This committee identifies the potential risks in each function area and across geographies. The identified risks are then discussed as the focus of training for executives, managers, and employees throughout the company.

We replicate this process at the business unit, local country and facility levels. Preparation for unpredictable global events such as natural disasters and disease outbreaks is one of the areas where we are updating our disaster recovery and business continuity plans.

Managing Risk in Emerging Markets

As a global company it is inevitable that we have operations in a number of countries that rank high on the Transparency International Corruption Index. All over the world, but particularly in these regions, we strive to minimize and mitigate risk in two ways:

• First, we consult regularly with local management and third-party experts to maintain an up-to-the-minute pulse on sensitivities, concerns and potential conflicts that may impact our operations overseas.
• Second, we educate plant managers, managers and other professionals about potential challenges that may arise from business operations in different countries with diverse environments that may conflict with our global values.

Legal Compliance Training Sessions

Our efforts to minimize and mitigate risk in emerging markets most commonly take the form of live, small-group trainings. Our legal compliance training sessions are translated or conducted into eight different languages. They focus on:

• Employment issues;
• Foreign Corrupt and Practices Act (FCPA)/Anti-Bribery;
• Intellectual property basics;
• Conflicts of interest;
• General business ethics;
• Trade compliance; and,
• Anti-trust laws/competition laws.

Some of our most important governance, business ethics, and enterprise risk management efforts are closely linked to the legal and regulatory environments that we operate in around the world.

Office of Global Government Affairs

Our Office of Global Government Affairs works to promote and safeguard TE’s business objectives by interfacing with federal, central, state, and local government officials in an ethical manner, and to influence legislation and regulations that are aligned with the company’s strategic business priorities. We aspire to undertake this work transparently and with input from our colleagues around the company.

New Web Portal

We have recently launched a new web portal which provides information on TE’s policy positions, the Global Government Affairs team, and their current priorities.