Corporate Governance - Board Policies

Board Policies

Ethics and Business Integrity Policy Summary

Carillion has a clear and unequivocal approach to business integrity and ethics which underlies the Group's core values of openness, collaboration, mutual dependency, sustainable, profitable growth professional delivery and innovation.

The Ethics and Business Integrity Policy sets out the standards and behaviours that all Carillion employess are expected to meet wherever in the world we operate. The way Carillion delivers this policy is reflected in the way the Group competes for business and delivers its services, focused on quality, value for money and the reliability and reputation of its employees.

The policy is:

Prohibition of fraud, bribery and corruption. Carillion takes extremely seriously the effective prevention and detection of fraud, bribery and corruption and any other fraudulent or corrupt activity. It will not tolerate them in any form. The Board is fully committed to promoting a zero tolerance approach across the Carillion group.

Gifts and hospitality. It is prohibited for a Carillion employee to offer or receive gifts or hospitality that could influence or be perceived to be capable of influencing the outcome of transactions or decisions relating to Carillion's business. There is a Gifts and Hospitality Policy.

Insider trading. Those who have access to inside information are advised of their responsibilities under the insider dealing rules. There is a Carillion Insider Dealing Code.

Conflicts of interest. All Carillion employees must disclose or seek direction on any issues that could potentially conflict with their responsibilities to the Company. There is a Conflicts of Interest Policy.

Working with others. We must ensure that we maintain our ethical standards and behave respectfully when working with others. The relationships with Carillion's suppliers and business partners are based on the principle of fair and honest dealings at all times and in all ways. We expect our suppliers and business associates and joint venture partners to extend the same high standards to all others with whom they do business, including employees, sub-contractors and other third parties. There is a Purchasing and Supply Chain Code of Ethics and a Sustainable Supplier Charter.

Competition law. Carillion plc, its subsidiaries and associated companies under Carillion control have a policy that all business activities are carried out in full compliance with competition laws - the laws which prevent anti-competitive behaviour. Competition law prevents us from carrying out any activities that restrict competition and makes illegal activities such as price fixing, unfair pricing, market sharing and refusal to supply customers. There is a Competition Compliance Guide.

Money laundering. Carillion aims to maintain high standards of conduct by preventing criminal activity through money laundering. There is a detailed Money Laundering Policy.

Universal Declaration on Human Rights. We support the belief that human rights are universal and adhere to the principles of human rights in our operations. We support the United Nations Declaration on Human Rights and work hard to ensure that in all areas of interaction with our employees, clients, suppliers, third parties, interviewees and joint venture parties that everyone is protected and treated absolutely fairly. Carillion has a Health and Safety Policy and an Equal Opportunities and Diversity Policy.

Law and regulation. Carillion respects the rule of law in all our dealings and has minimum standard compliance with all law and regulation to which our businesses are subject. We have legal compliance programmes for:

• European Union and United Kingdom Competion Laws
• Bribery Act 2010
• Canadian Criminal Code C46
• Corruption of Foreign Public Officials Act (Canada)

Responsibility. All Carillion's employees have a responsibility to protect Carillion's assets, including information and goodwill as well as property. Carillion encourages its people to raise genuine concerns about malpractice at the earliest possible stage and in the right way. There is a Whistleblowing Policy and an Ethis and Business Integrity Incident Response Plan.

This Ethics and Business Integrity Policy is applied by all Carillion's business through a series of detailed procedures. They allow Carillion to carry into practice its reputation for conducting business to the highest ethical standards, which are essential to its relationships with customers, business partners, employees, shareholders and the public. The detailed procedures reflect the way Carillion competes for business, through the quality and value of its work and through the reliability and reputation of its people.

The Ethics and Business Integrity Policy is overseen by the Business Integrity Committee, and its implementation is reviewed annually by the Board.

• Download the full Ethics and Business Integrity Policy (PDF)

Policy on external appointments

Recognising that external appointments can broaden their knowledge and so be of benefit to the Company, Executive Directors are permitted, at the discretion of the Board, to accept a limited number of such appointments and retain the fees received for such appointments. John McDonough was a Non-Executive Director of Tomkins plc and Richard Adam was a Non-Executive Director of SSL International plc until these companies were each taken over in 2010.

Nomination and remuneration of Directors

The appointment of a Director is a matter for resolution by the Board as a whole, taking advice from the Nominations Committee.

For Board appointments, the Nominations Committee has used the services of executive recruitment consultants, JCA and Odgers. Details of potential candidates are provided by the consultants and initially reviewed by a sub-committee of the Nominations Committee. Meetings with selected candidates are then held with Directors. Subsequently, the Nominations Committee meets to recommend an appointment, which is then proposed to the Board for approval.

In the case of Non-Executive Directors, initial appointments are normally for three years; re-appointment is subject to review and is not automatic.

The fees of Non-Executive Directors are determined by the Board as a whole, taking into account the commitment required and participation in the work of committees and other advisory services in relation to the business of the Group. In advising the Board on such fees, it is the policy of the Executive Directors to seek independent external advice concerning the appropriateness of the amounts by comparison with general practice. The level of fees currently payable to the Non-Executive Directors is based on independent external advice.

Retirement of Directors

In accordance with the UK Corporate Governance Code, all directors submit themselves for re-election at the Annual General Meeting.

The service contracts of the Executive Directors and the terms and conditions of appointment of the Non-Executive Directors are available for inspection at the registered office of the Company during normal business hours on any weekday (bank holidays excepted) and at the Annual General Meeting.

Induction and development of Directors

Directors are provided with a comprehensive information pack on joining the Company and are advised of their legal and other duties and obligations as a director of a listed company. In addition, all new Directors receive induction on their appointment covering such matters as the operation and activities of the Group, the role of the Board and the Company's corporate governance procedures. Directors are also briefed by the Company's external advisors, where appropriate, on changes to legislation, regulation or market practice, as well as receiving briefings from business units throughout the year.

At least once a year, the Board visits an operational site and in November 2010, the Directors visited the Group's operations in Oman. Directors also visit other operations and meet a wide range of employees.

The regular updating of Directors' skills and knowledge is encouraged and a procedure has been established whereby the Company Secretary is notified by Directors of their requirements in this respect.

Relations with shareholders

In addition to communicating with shareholders generally from time to time, the Executive Directors and the Director of Group Corporate Affairs meet regularly with representatives of major shareholders in order to foster the mutual understanding of objectives. Meetings are also held with other shareholders and prospective shareholders. The details of these meetings are reported to the Board. The Chairman and Senior Independent Non-Executive Director are available for meetings with representatives of major shareholders as required.

Private and institutional shareholders are encouraged to attend the Company's Annual General Meeting.

The Company complies fully with the provisions of the UK Corporate Governance Code in respect of the notice, content of agenda and conduct of its Annual General Meetings. Chairmen of the Remuneration and Audit Committees were present at the Annual General Meeting on 4 May 2011 to respond to shareholders' questions.