Breakout Session # 1904 Adam Turteltaub, Corporate Relations Executive, LRN April 24, 2007

2. Ethics, Compliance and Small to Medium-Sized Companies Breakout Session #1904 Adam Turteltaub, Corporate Relations Executive, LRN April 24, 2007 10:45 – 11:45 am

3. Sonia Ferguson Sabre Holdings | Senior Vice President, Deputy General Counsel W. John Glancy Holly Corporation | Sr. Vice President, General Counsel & Director Sozeen Mondlin MITRE Corporation | Assistant General Counsel Adam Turteltaub LRN | Corporate Relations Executive Speakers

4. Education Certification Helpline CULTURE Incident Management Enablement Services Dashboard LRN Provide integrated solutions designed to foster compliant, ethical cultures.

5. PEOPLE LRN

6. The Sentencing Guidelines Requirements ...an organization shall— (1) exercise due diligence to prevent and detect criminal conduct; and (2) otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.

7. Sentencing Guidelines Seven Steps • Establish standards and procedures to prevent and detect criminal conduct • The organization’s governing authority shall be knowledgeable about the content and operation of the compliance and ethics program and shall exercise reasonable oversight • High-level personnel of the organization shall ensure that the organization has an effective compliance and ethics program, • Specific individual(s) within the organization shall be delegated day-to-day operational responsibility for the compliance and ethics program.

8. Sentencing Guidelines Seven Steps • The organization shall use reasonable efforts not to include .. any individual whom the organization knew, or should have known...has engaged in illegal activities or other conduct inconsistent with an effective compliance and ethics program. • The organization shall take reasonable steps to communicate...its standards and procedures...by conducting effective training programs and otherwise disseminating information appropriate to such individuals’ [including agents] respective roles and responsibilities.

9. Sentencing Guidelines Seven Steps • The organization shall take reasonable steps...to ensure that the organization’s compliance and ethics program is followed, including monitoring and auditing to detect criminal conduct...to evaluate periodically the effectiveness of the organization’s compliance and ethics program; and...to have and publicize a system, which may include mechanisms that allow for anonymity or confidentiality, whereby the organization’s employees and agents may report or seek guidance regarding potential or actual criminal conduct without fear of retaliation.

10. Sentencing Guidelines Seven Steps • The organization’s compliance and ethics program shall be promoted and enforced consistently throughout the organization through... appropriate incentives...[and] disciplinary measures. • After criminal conduct has been detected, the organization shall take reasonable steps to respond appropriately to the criminal conduct and to prevent further similar criminal conduct, including making any necessary modifications to the organization’s compliance and ethics program.

11. Plus One • (c) In implementing subsection (b), the organization shall periodically assess the risk of criminal conduct and shall take appropriate steps to design, implement, or modify each requirement set forth in subsection (b) to reduce the risk of criminal conduct identified through this process.

12. Small Organizations “However, a small organization may meet the requirements of this guideline with less formality and fewer resources than would be expected of large organizations.”

13. The Key Change: It’s About Culture United States Sentencing Commission: “Create an organizationalculture that encourages a commitment to compliance with the law and ethical conduct.” National Association of Corporate Directors mission:“establishing an ethical corporate culture.” The Department of Justice: “Management is responsible for a corporate culture in which criminal conduct is either discouraged or tacitly encouraged.”

14. Corporate Culture Self-governance Informed Acquiescence Systematic Approach Blind Obedience Anarchy Cultural Evolution

15. PREVENT DEFINE DETECT Self-governance EVALUATE RESPOND Systematic Approach

16. Define • About half of companies have already integrated their ethics and compliance risk process with other risk management processes. • At least 83% have a risk assessment process in place. Source: LRN Community Practices Survey

17. Prevent • Most companies educate employees through a variety of approaches, but management involvement and international efforts lag Source: LRN Community Practices Survey

18. Prevent • Managers and other executives are most likely to be educated, but a significant number of companies have begun reaching out to suppliers. Source: LRN Community Practices Survey

19. Detect • Supervisors are generally seen as the first line of detection, but there was no strong pattern. Source: LRN Community Practices Survey

20. Respond • The range of resources available for responding to investigations is substantial but may reflect who filled out the survey. Source: LRN Community Practices Survey

21. Holly Corporation • Headquartered in Dallas, Texas. • Independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel and jet fuel. • Traded on the New York Stock Exchange. • Holly also owns a 45% interest (including the general partner interest) in Holly Energy Partners, L.P., a publicly traded limited partnership (also listed on the New York Stock Exchange).

22. Holly Corporation • Number of Employees:  Approximately 860. • Number of FTEs in Ethics and Compliance Program: a portion of the time of 2 employees • Where program is housed:  Office of General Counsel. • Key Issues:  • Recognizing and avoiding conflicts of interest situations • Getting the facts concerning alleged violations • Determining appropriate discipline for violations.

23. Sabre Holdings • As a world leader in the travel marketplace, Sabre Holdings merchandises and retails travel products and provides distribution and technology solutions for the travel industry. • Sabre Holdings supports travelers, travel agents, corporations and travel suppliers around the world through its three companies, Travelocity, Sabre Travel Network and Sabre Airline Solutions.

24. Sabre Holdings • Number of Employees:  9,000. • Number of FTEs in Ethics and Compliance Program: .5 • Where program is housed:  Office of General Counsel. • Key Issues:  • Ensuring accurate books and records and preventing conflicts of interest.  • Stemming from our line of businesses, compliance with the FCPA  and various OFAC regulations.

25. The MITRE Corporation • Not-for-profit organization that works in the public interest to address the critical needs of its government sponsors in the areas of systems engineering, information technology, operational concepts, and enterprise modernization. • MITRE manages three Federally Funded Research and Development Centers (FFRDCs) for the Department of Defense, Federal Aviation Administration, and Internal Revenue Service. • MITRE also has its own independent research and development program.

26. The MITRE Corporation • Number of Employees:  6,000. • Number of FTEs in Ethics and Compliance Program: a portion of the time of 2 employees • Where program is housed:  Office of General Counsel. • Key Issues:  • Maintaining the visibility of ethics and compliance activities and resources in the workplace; • Providing an appropriate level of training to a highly educated workforce; • Assimilating new employees into the existing ethics and compliance culture

27. Thank You