Code of Ethics
founded in 1896, has built its reputation by producing quality
products as well as by adhering to the highest ethical, moral and
legal standards in the conduct of its business. Whether in dealing
with our customers, our suppliers, our communities or our
shareholders, CTS believes that principles of fairness, honesty and
integrity must guide us in whatever actions we undertake. For our
company to grow and prosper it is essential that everyone in the
organization adhere to a code of ethical conduct. Our employees
over the years have understood and lived up to the high standards of
ethical conduct that we have demanded.
To insure that
all employees can fully understand CTS' expectations with respect to
personal integrity and ethical and legal behavior, CTS created this
Code of Ethics. All employees are expected to comply with each
Ethical Standard and with the CTS policies set forth in the Code of
Ethics. Managers and supervisors have additional obligations, not
only to serve as examples of exemplary conduct, but also to inform
their subordinates of CTS' policies and expectations with respect to
In the final
analysis, CTS' business reputation is its most valuable asset,
because it is the cornerstone on which our competitive position in
the marketplace, and the ability for growth and continued job
opportunities, depends. CTS is placing a high degree of trust in
you, its employees, to keep that reputation unblemished.
Vinod M. Khilnani
Chief Executive Officer
ETHICAL STANDARD NO.
AND FREEDOM FROM
CTS is committed
to provide equal employment opportunity for all applicants and
employees. Individuals will be hired and promoted on the basis of their
qualifications, performance and abilities. CTS will maintain
Affirmative Action Plans at each location as required by law. Workplace
harassment, whether verbal, written or physical, will not be tolerated.
We are determined to provide a workplace free from any type of illegal
discrimination and harassment.
CTS employment practices will comply in all respects with applicable
state and federal laws. It is the fundamental policy of CTS that:
Opportunity will be provided to all persons regardless of race, color,
religion, sex, age, national origin, disability, veteran status or any
other category protected by law.
hiring, training and promotions will continue to be done without regard
to race, color, religion, sex, age, national origin, disability, veteran
status or any other category protected by law.
All conditions of
employment, including but not limited to compensation, benefits,
transfers, layoffs, return from layoff, company-sponsored training,
education, tuition assistance, social and recreational programs, will
continue to be administered without regard to race, color, religion,
sex, age, national origin, disability, veteran status or any other
category protected by law.
CTS Corporation, its
business units and subsidiaries will comply with applicable laws, rules,
and regulations pertaining to Equal Employment Opportunity and, where
deficiencies exist, will pursue remedies to correct those deficiencies.
CTS will maintain
formal Affirmative Action Plans at each location which is required by
law to do so. CTS will take affirmative action to ensure that qualified
applicants are employed and that employees are treated during employment
without regard to their race, color, religion, sex, national origin,
disability or veteran status.
CTS General Managers
and Human Resources Managers will insure that all employee selection
activities covered by the Federal Employee Selection Guidelines are
carried out in a manner consistent with those Guidelines and that all
such selections are based on bona fide occupational requirements.
Workplace harassment is defined as offensive or unwelcome behavior or
conduct toward an individual based on diverse human characteristics or
cultural background (such as age, race, gender, national origin,
disability, religion or any other diverse human characteristic) which
substantially interferes with an individual’s employment or creates an
intimidating, hostile or offensive work environment. Workplace
harassment does not refer to employee performance-based discussions or
other appropriate business- related conversations. Some examples of
workplace harassment include continued or repeated verbal abuse;
comments and joking about ethnic backgrounds, race, religion, physical
characteristics, racial or ethnic stereotypes; and graphic or degrading
comments about an employee’s appearance.
Sexual harassment is
a specific form of workplace harassment and is defined as unwelcome or
unwanted conduct of a sexual nature when (1) submission to or rejection
of this conduct by an individual is used as a factor in decisions
affecting hiring, work assignment, evaluation, promotion or other
aspects of employment, and/or (2) such conduct substantially interferes
with an individual’s employment or creates an intimidating, hostile or
offensive work environment. Sexual harassment does not refer to
occasional compliments of a socially acceptable nature or welcome social
relationships. Examples of conduct that may, depending upon the
circumstances, constitute sexual harassment, include demands for sexual
favors that are accompanied by a promise of favorable job treatment or a
threat concerning the employee's employment; sexual flirtations,
advances or propositions; verbal abuse of a sexual nature, sexually
related comments and joking; the display of sexually suggestive objects
or pictures; and uninvited physical contact or touching, such as
patting, pinching, or constant brushing against another’s body.
It is unlawful and a
violation of this policy to retaliate in any way against an individual
who makes a report of workplace harassment or who cooperates in an
investigation of a complaint of workplace harassment. Retaliation
should be reported immediately. Retaliation will not be tolerated and
will subject the violator to discipline as set forth below.
Any employee who has
experienced conduct he or she believes is contrary to this policy should
immediately report this concern to his or her Human Resources Department
or to the CTS Legal Department.
Any allegation of
discrimination or workplace harassment brought to the attention of the
Company will be promptly investigated by the CTS Legal Department in a
confidential manner designed to protect the privacy of the individual(s)
involved. Confidentiality will be maintained throughout the
investigatory process to the extent practical and appropriate under the
circumstances. CTS prohibits retaliation against any individual who
reports alleged discrimination, or who participates in an investigation
of such reports. Any such retaliation should be reported immediately.
Retaliation will not be tolerated and will subject the violator to
discipline as set forth below.
constituting discrimination, workplace harassment or retaliation will be
dealt with appropriately. The offender shall be subject to disciplinary
action, up to and including termination.
If an employee
reports a violation of this policy as set forth above and does not
believe the situation has been satisfactorily resolved, the employee
should then bring his or her complaint directly to the CTS General
ETHICAL STANDARD NO.
HEALTH AND SAFETY
CTS is committed
to promote the health and safety of its employees through compliance
with applicable laws and regulations. CTS expects its employees to
support this commitment by complying with all CTS practices, rules and
regulations regarding safety and by actively striving to identify
opportunities for improvement in CTS' health and safety programs.
operations worldwide shall be conducted in compliance with applicable
health and safety laws and regulations, and with a positive commitment
to continuous improvement.
The Corporate Safety
and Health Council will oversee the Company’s health and safety
program. The Council consists of senior executives responsible for
administration, environmental health and safety and legal compliance, as
well as the manager directly responsible for environmental health and
safety, the Environmental Health and Safety Specialist, and other senior
executives or managers who may be appointed from time to time. The
Council will be responsible for the following:
with respect to the Company’s health and safety program.
Company’s performance and efforts to develop plans for compliance with
health and safety laws and regulations.
supporting, as appropriate, funding requests for corporate compliance
health and safety activities of the Corporate Environmental Services
Environmental Services staff will assist each CTS location as needed to
achieve policy objectives and compliance with applicable laws and
will oversee the implementation of the day-to-day activities required
for compliance with applicable health and safety laws and regulations.
In addition, they will designate a Safety Coordinator, by name and
title, for the facility to implement the health and safety program.
performance and other appropriate documentation, as directed by
Corporate Environmental Services staff, is to be forwarded to Corporate
to determine conformance to this policy.
Environmental, Health and Safety Specialist will be responsible for
performing periodic audits of the facilities to determine compliance
status and program quality.
ETHICAL STANDARD NO.
CTS is committed
to maintaining the quality of the environment in the communities in
which it operates. It is CTS' intent to comply with both the letter and
the spirit of environmental laws and regulations. CTS employees will
treat the environment with care and engage in responsible business
practices with respect to environmental management.
CTS Corporation is
committed to treat the environment with care, recognizing this issue as
global in nature. It is CTS’ intent to be recognized as a responsible
business committed to continual improvement in environmental management
in all business activities. To that end CTS will:
Comply with relevant
environmental legislation and regulations, and with other requirements
to which the organization subscribes.
prevention of pollution through Waste Minimization/Recycling activities
and other acceptable methods.
policy to all employees and make it available to the public.
assess and audit the Environmental Management System (EMS) to ensure
that environmental issues are properly addressed.
The CTS Corporate
Environmental Services staff will provide guidance and direction to CTS
General Managers and the appropriate staff at each CTS location to
establish procedures to comply with this policy.
The person designated
as Environmental Control Coordinator at each CTS location will handle
day-to-day compliance activities and assist in implementing the EMS,
including obtaining proper environmental permits and maintaining records
for compliance with applicable laws and regulations.
environmental problems or questions should be directed to the Corporate
Environmental Services staff for review and recommendations. The
Corporate staff will provide major project management and engineering
advice and assistance, and consult and negotiate with governmental
agencies as needed. The Corporate staff will provide plant personnel
with regulatory and technology-based information vital to their
operations. Individual facility environmental controls,
recycle/recovery methods, and experiences may be reported in the
Environmental Services staff will undertake periodic compliance audits
at each CTS location to ensure satisfactory performance to the
Environmental Management System and the goals of this Policy.
ETHICAL STANDARD NO.
CTS is committed
to compliance with the antitrust laws of the United States, and of such
other countries as may be applicable to CTS' business operations. We
believe in fair and honest competition within the free enterprise
system. All employees who have periodic contact with competitors of CTS
will be ever mindful of the existence of these laws and strive to avoid
placing themselves in situations which might create even the appearance
of impropriety. Employees in management positions will be held
accountable for taking the appropriate measures in their respective
areas to achieve strict legal compliance, both by themselves and by
It is the policy of
CTS Corporation to comply with the antitrust laws of the United States,
and other countries applicable to its business operations, and to hold
employees in management positions personally and strictly accountable
for taking the appropriate measures necessary to achieve this objective
within their respective areas of responsibility.
While it is the
objective of CTS to comply with all of the laws of the United States as
well as the laws of the various jurisdictions in which we do business,
the company recognizes the need to single out compliance with the
antitrust laws of the U.S. (and other countries where applicable) as a
subject requiring particular emphasis.
The antitrust laws
are relevant to numerous business decisions, and the consequences of a
violation can seriously injure CTS and the individuals involved.
Several provisions of the antitrust laws of the United States contain
penal provisions under which employees who authorize or engage in acts
in violation of these laws can be personally liable for substantial
fines and/or imprisonment.
Sherman Act-Section 1
In furtherance of
this Policy, the following must be strictly adhered to:
a) No employee shall
enter into any understanding or agreement, whether express or implied,
formal or informal, written or oral with a competitor limiting or
restricting in any way any of the following:
- product or service offerings
- terms or conditions of sale
- production or sales volumes
- production facilities or capacity
- market share
- decisions to quote or not quote certain business
- sales territories
- distribution methods
b) Additionally, the
following “understandings” may be in violation of the antitrust laws in
certain circumstances. Therefore, without prior consultation with the
CTS Legal Department, no discussions should take place related to:
any understanding with a customer or supplier which conditions sales or
purchases of CTS products on reciprocal sales or purchases of the
customer/supplier’s products, or
any understanding with a CTS customer which attempts in any way to
place “restrictions” on what the customer can do with product, or
with a competitor, customer, supplier or distributor, which would
attempt to restrict anyone from manufacturing any product or providing
any service, or to sell to or buy from, any third party except where
such restriction would be permitted pursuant to any applicable
intellectual property right.
Discussions with Competitors
It is imperative to
remember that most lawsuits involving violations of the antitrust laws
are based in large part on circumstantial evidence. Therefore, CTS
employees who do have periodic contact with competitors should be ever
mindful of not placing themselves in positions which might create the
“appearance of impropriety.” Conversation or communication with
competitors on any of the above topics, no matter how innocent, could
likely serve as evidence of an illegal understanding in the event of an
As a result, no employee should discuss with or accept information from
a competitor or any other third party acting for a competitor, on any
subject as to which an understanding with the competitor would be
prohibited as set forth above. Nothing herein should be interpreted to
preclude obtaining competitive information from independent third party
sources who are not acting for a competitor in transmitting that
Participation in Trade Associations (or other meetings) Where
Competitors are Present
No CTS employee should attend or remain present at any meeting where
there is a discussion by competitors of any subject which the CTS
employee would be otherwise precluded from discussing with the
competitor as set forth above. Additionally, no CTS employee should
attend or remain present at any informal trade association
meeting of competitor members held for the purpose of discussing
business matters, without observing the formal procedural requirements
established by the trade association for its business meetings.
Employees should be
aware that participation in standard development and product
certification activities which impact competitors or suppliers may raise
antitrust concerns. Therefore, before participating in committees or
organizations which develop standards or certify products, employees
should consult with the CTS Legal Department.
Price Discrimination and Robinson-Patman Act Issues
is controlled by the Clayton Act. The Robinson-Patman Act is an
amendment to Section 2(a) of the Clayton Act. The purpose of this Act
is to prohibit a seller from charging different prices to two (2)
competing customers for purchases of like grade or quantity products
where the effect of which might be to injure competition.
There are, in certain
instances, legally recognized justifications for charging competing
customers different prices for the same product. Such justifications
are very limited and highly scrutinized by the U.S. Government.
Therefore, company legal counsel should be consulted before any
such program or practice is implemented.
Business Outside the
The U.S. antitrust
laws also apply to actions or agreements entered into abroad where the
effect of those actions or agreements would have a substantial impact on
the domestic or foreign commerce of the U.S. Additionally, most of the
industrial countries where CTS transacts business have enacted various
forms of antitrust laws (which range from very similar to very
dissimilar to those of the U.S.). Company employees should be ever
mindful of the fact that such laws do exist and should seek the advice
of company legal counsel as needed.
ETHICAL STANDARD NO.
INTERNATIONAL TRADE CONTROLS
CTS is committed
to compliance with U.S. laws and regulations designed to protect
national security and promote U.S. foreign policy objectives, through
the control of the export of U.S. goods and technology. CTS expects its
employees to have a working knowledge of applicable trade control laws
and regulations, as they relate to their specific job responsibilities.
Those with job responsibilities related to export transactions will be
expected to participate in appropriate training with respect to
international trade controls.
It is the policy of
CTS Corporation to strictly comply with U.S. international trade control
regulations. In order to ensure compliance, each employee whose job
responsibilities relate to exports must have a working knowledge of
these regulations as they may relate to his or her job
As a United States
company engaged in international commerce, CTS must comply with U.S.
laws which are designed to control the export of U.S. goods and
technology in order to protect national security and advance foreign
policy objectives. U.S. international trade controls include export
control laws, such as the Export Administration Regulations, the
International Traffic in Arms Regulations and the Foreign Assets Control
Regulations, as well as anti-boycott laws. Violation of these laws may
result in revocation of export privileges, substantial fines and
criminal penalties. Therefore, compliance is essential to CTS’
continued global manufacturing and sales growth. The purpose of this
policy is to affirm the CTS commitment to comply with international
trade controls and to allocate responsibility for maintaining
Under the Export
Administration Regulations, an export includes not only the shipment of
items out of the U.S., but the release of technology or software to a
foreign person in the U.S. or the release of technology or software in a
foreign country. Therefore, an e-mail sent overseas or a meeting at
which technical information is disclosed to a non-U.S. citizen could
constitute an export subject to the regulations. The re-export of a
covered item from one foreign country to another may also be treated the
same as an export from the U.S. Exports to particular individuals,
companies, and countries may be prohibited all together or may require
an export license depending on the nature of the transaction. The
aspects of each transaction must be examined in order to determine how
the regulations will apply.
Items being exported
must be accurately classified under the regulations. CTS is charged
with the duty to know the customer to whom an item is being exported,
the end-use to which an item will be put, and its final destination.
CTS must be aware of potential military (dual-use) applications for an
item being exported. Computers and electronic components in particular
may have potential military applications which make those items subject
to the regulations even though they are not marketed for military use.
Company employees are required to screen all transactions for “Red
Flags” which would suggest possible illegal activity. Moreover, CTS
must appropriately document export transactions and retain the
documentation as required by the regulations.
Employees with export
control responsibilities must make appropriate inquiries within and
outside CTS in order to obtain the information necessary to correctly
classify an export transaction. Employees should not “self-blind” by
suggesting answers to respondents which would appear to make a
transaction less problematic. Moreover, responsibility for the
performance of these duties cannot be shifted to third parties such as
freight forwarders. Employees are responsible for communicating CTS’
policy regarding export compliance to agents and independent contractors
with whom they work and who may be involved in export transactions.
Employees must also
be aware of U.S. anti-boycott laws. These laws prohibit U.S. companies
from participating or cooperating with the boycott of countries which
are friendly to the U.S. or refusing to do business with a U.S. person
on the basis of race, religion, sex or national origin. Most of the
enforcement activity in this area has concerned the Arab boycott of
Israel, but employees must guard against conduct which may discriminate
against any group. Employees should be alert to the possibility that
routine documents such as letters of credit and shipping documents may
contain boycott provisions and that inquiries regarding CTS suppliers
and customers may be boycott related. The regulations require that any
boycott related requests, including requests for information, must not
be agreed to and must be reported to the U.S. Department of Commerce.
General Managers are
responsible for designating an employee or employees who will have
primary responsibility for the international trade control compliance of
that business unit. Those with job responsibilities related to export
transactions are expected to participate in training with respect to
export transactions and boycott issues which may arise in the
performance of their job responsibilities. It is important to remember
that even inadvertent violations of international trade controls could
subject CTS to substantial fines and penalties as well as possible loss
of export privileges. Any questions or concerns regarding export
classification, suspicious transactions and boycott-related requests
should be referred to the CTS Legal Department.
ETHICAL STANDARD NO.
GIFTS, GRATUITIES AND
CTS requires its
employees to use only lawful business practices in promoting CTS'
business or position to any governmental authorities, foreign or
domestic. Employees of CTS are prohibited from making or offering
payments or gifts to customers, governmental officials, or political
parties or candidates for the purpose of inducing or influencing any
action by such entities. Customer policies with respect to the
acceptance of entertainment, gifts or other business courtesies are to
be strictly respected.
No employee of CTS or
any subsidiary or controlled affiliate acting on behalf of CTS shall, in
violation of the Foreign Corrupt Practices Act (FCPA) or any applicable
law, make or offer to make directly or indirectly, through any other
person or firm, any payment of anything of value (money, gift,
contribution, etc.) to:
Any person or firm
employed by or acting for or on behalf of any customer, whether
private or governmental, for the purpose of inducing or rewarding any
favorable action by the customer in any commercial transaction;
or any governmental entity, for the purpose of inducing or rewarding any
action (or the withholding of any action) by a governmental entity or
authority in any governmental matter; or
official, political party or official of such party, or any candidate
for political office, for the purpose of inducing or rewarding favorable
action (or the withholding of action) or the exercise of influence by
such official, party or candidate in any commercial transaction or
CTS will employ
only reputable, qualified individuals and firms who agree to be
bound by and act in accordance with the provisions of this policy, to
act as consultants, agents, sales representatives or distributors, and
only under compensation arrangements which are customary and reasonable
in relation to the services provided.
organizations, governmental agencies or others have published policies
intended to provide guidance with respect to the acceptance of
entertainment, gifts or other business courtesies by their
employees, such policies shall be strictly respected.
The provisions of
this policy are not intended to apply to ordinary and reasonable
business entertainment and/or gifts of an insubstantial value, customary
in local business relationships and not violative of the law as applied
to that geography or environment.
All employees must
use only lawful business practices in CTS' commercial operations or
activities and in promoting CTS’ business or position to any
governmental authorities, foreign or domestic. Employees must
avoid putting themselves in situations where the appearance of improper
activities, whether real or perceived, could damage CTS’ reputation or
otherwise result in a violation of law or other serious consequence to
CTS as well as to the employees involved. All CTS officers, managers
and employees are responsible for compliance with this policy.
ETHICAL STANDARD NO.
CONFLICTS OF INTEREST
CTS expects its
employees to serve the company with undivided business loyalty.
Employees must avoid any relationships which create a perceived or
actual conflict between the employee's obligation to the company and the
employee's personal self-interest.
CTS recognizes and
respects the right of employees to take part in financial, business and
other activities outside of their jobs, provided that these activities
are lawful and are free of conflicts with and do not detract from, their
responsibilities as Company employees. Employees must not as a part of
engaging in any outside activities, misuse Company resources or
influence, or discredit the Company’s good name and reputation in any
way. Employees must never permit their personal interests to conflict,
or create the appearance of conflicting with the interests of the
Company or its customers. CTS employees should be free from any
personal relationships, activities, or financial affairs that might
influence any business decisions or recommendations they might make that
affect the Company.
A conflict of interest exists in any situation in which an employee uses
his or her contacts or position in the Company to advance interests
other than those of the Company, such as his or her private business or
financial affairs or those of a friend or relative whether or not at the
actual expense of the Company. It is not possible to list every
situation which might result in a conflict of interest. The following
list represents the types of business/personal dealings where conflicts
of interest are most likely to occur:
Investments in suppliers, customers, competitors
Outside employment (part-time, weekends, etc.) with a supplier to CTS
Receipt of gifts from suppliers, customers or competitors
Serving as an officer or director for a banking institution or business
Potential conflict resulting from a family member or close friend
working for or owning a supplier of CTS
Any outside activity or relationship which could reasonably be
interpreted as being in conflict with the interests of the Company.
The mere existence of
one of the above situations will not necessarily create an actual
conflict of interest. How the situation is handled, however, might
create a conflict. All such situations should be immediately reported
to management. Should the Company conclude that an actual or potential
conflict exists, the employee will be asked to either remove
himself/herself from the situation creating the conflict or the Company
will take the necessary steps to insure that the employee is not
involved in any decision concerning a business relationship between CTS
and the affected organization.
The Company reserves
the right to make the final determination concerning actual or potential
conflicts of interest. All information disclosed to the Company will be
ETHICAL STANDARD NO.
INSIDER TRADING AND
which involves the purchase or sale of a company’s securities while in
possession of material nonpublic ("inside") information about that
company, is prohibited by federal law, as is stock "tipping," which
involves the disclosure of inside information about a company to others
who purchase or sell the securities of that company. Illegal activity
with respect to insider trading and stock tipping is strictly prohibited
"Inside information" means material, non-public information in the
possession of a CTS director, officer or employee.
"Material" means information that a reasonable investor would be likely
to consider important in deciding whether to buy, sell or hold a
security. To minimize the risk of misjudging whether a reasonable
investor would consider particular information to be important, a
director, officer or employee should assume the information is important
if it does, or would, affect his or her own consideration of whether to
buy, sell or hold the security in question.
"Nonpublic" means that the information either has not been disclosed to
the public or, if it has been disclosed, the time elapsed since the
disclosure has not been sufficient for investors to fully evaluate the
"Security" means any stock, bond, note, debenture, put or call option,
or other instrument commonly known as a security.
prohibits any director, officer or employee from engaging in any
activities that would violate the laws prohibiting insider trading and
tipping. Penalties for violations of laws prohibiting insider trading
and tipping are severe. Employees violating these laws could face
criminal penalties of up to $1 million in fines and ten years in prison
for each violation. In addition, violations of these laws could subject
CTS to significant civil liability and fines. Misuse of inside
information in violation of this policy will result in disciplinary
action by CTS.
In order to avoid violating laws related to insider trading and tipping,
each CTS director, officer or employee who has inside information about
CTS, or about another company that he or she has obtained by virtue of
his or her position with CTS, is expected to abide by the following
If you have inside
information about CTS, or about another company, that you obtained in
your position with CTS, do not buy or sell the securities of CTS or of
the other company.
Do not trade in the
securities of CTS or of the other company from the time inside
information is known to you until three trading days after it has been
Do not recommend or
suggest that anyone else buy, sell or hold the securities of CTS or of
the other company while you have inside information.
inside information to anyone outside CTS, including family members,
except when you reasonably believe such disclosure is needed to enable
CTS to carry on its business properly and effectively, and you have a
reasonable expectation that the person to whom the information is
disclosed will keep it in confidence.
Within CTS, only
discuss or distribute inside information in the ordinary course of
business and when you have no reason to believe that the information
will be misused or improperly disclosed by the recipient.
officers of CTS should be aware that they are subject to additional
trading restrictions in CTS stock and that all trades in CTS stock must
be cleared in advance by the Corporate Secretary or General Counsel.
If you are in doubt
as to whether trading in the securities of CTS or of another company, or
disclosing information about CTS or another company which was obtained
in your position with CTS, would violate this policy or the law, do not
trade or disclose the information without prior legal review and
ETHICAL STANDARD NO.
CTS is committed
to the fair and impartial treatment of all persons and companies with
whom it has business relationships, including its customers, suppliers
and distributors. Employees are expected to avoid situations where the
giving or accepting of gifts or entertainment could be construed as an
attempt to unduly influence a business relationship.
An employee should
not own any substantial amount of stock or other financial interest in,
or participate in the business of, an actual or potential supplier of
goods or services to the Company, if that employee is directly or
indirectly involved in the Company’s business with the supplier. The
definition of what constitutes a “substantial” amount of stock or other
financial interest will depend on the particular facts and circumstances
in any given case.
An employee should
not accept gifts from any actual or potential supplier of goods or
services, other than non-cash gifts of an insubstantial value which are
generally used for promotional purposes by the supplier. Participating
in business-related functions, such as lunches or other meals, with a
supplier, is a normal and permissible business practice. However, each
employee should exercise care that the value and frequency of such
occasions are not excessive.
An employee should
not seek or accept loans from any supplier or any person or entity
seeking to do business with the Company, except in the case of loans
made by financial institutions in the normal course of business at
interest rates prevailing at the time of the borrowing.
An employee should
not purchase items for personal use on a discounted or wholesale basis
from actual or potential suppliers of goods and services to the Company,
unless the personal purchases are made pursuant to a Company-sanctioned
supplier discount program.
When suppliers have
published policies intended to provide guidance with respect to the
acceptance of entertainment, gifts or other business courtesies by
their employees, such policies shall be strictly respected.
All CTS employees are
responsible for avoiding activities which could damage the company's
reputation or its relationships with its actual and potential
suppliers. Employees should not provide or accept gifts of more than
nominal value or entertainment of greater than usual or customary
expense. Employees should also make sure that their spouses or other
family members do not accept gifts or other benefits from CTS’
ETHICAL STANDARD NO.
COMMITMENT TO QUALITY
CTS is committed to
achieving Total Customer Satisfaction through manufacturing and
operational excellence. Excellence in product quality, delivery, value
and service can be achieved only if each and every employee is dedicated
to these objectives.
It is CTS’ goal to
manufacture products that are free from defects in material and
workmanship, comply with agreed-upon specifications and customer
requirements, meet customer needs and exceed customer expectations. CTS
is committed to the continual improvement of all systems that affect
customer satisfaction. CTS’ endorsement of the elements of ISO 9000 and
TS-16947 reflect this commitment.
It is CTS’ policy
continually to audit, review and improve its systems. This is
accomplished through benchmarking against other “best in class” systems,
seeking customer input, and through employee education and training.
Quality is the
responsibility of every CTS employee. Each employee is expected to
comply with CTS’ quality systems and procedures and applicable quality
standards and regulations. All operations shall be performed safely and
in an efficient and cost effective manner, with constant vigilance as to
quality issues that may arise.
Each and every
employee is expected to strive for continual improvement in personal
performance and in CTS’ procedures and systems. Each employee’s
commitment to excellence helps ensure that CTS’ products meet the
highest standards for quality, value and timely delivery.
ETHICAL STANDARD NO.
PROTECTION OF INVENTIONS
protects all CTS intellectual property, whether in the form of patents,
trade secrets, copyrights, trademarks or confidential information, and
expects its employees to do the same.
CTS is a technology
driven company. Rigorous protection of intellectual property, whether
in the form of patents, trade secrets, copyrights or trademarks, is an
integral and critical part of CTS’ business operations. The CTS patent
portfolio is one of the corporation’s most valued assets. It is
critical that CTS maintain a leadership intellectual property position
in its technology areas.
encouraged to submit invention disclosures to their area manager, local
patent committee chair or the Intellectual Property Practice Group (IP
Group) of the Legal Department for evaluation. CTS welcomes invention
disclosures from employees whether their primary function is technical
or non-technical and without regard to rank or seniority.
An agreement to
assign inventions and patents to CTS is mandatory for all employees.
Exemptions from such agreements to assign may be authorized for
contracted consultants in those circumstances when business objectives
are better served by such action. Employees shall execute such
declarations, assignments and other patent related documents as may be
necessary in the course of invention evaluation, patent prosecution, or
protection of patent or analogous property rights, to assure that title
in such inventions is held by CTS. Any use of contract engineers or
designers or of outside development houses must be reviewed by the IP
Group to ensure proper treatment of IP rights.
Pre-release IP Review
Prior to disclosing
an idea or invention outside of CTS, employees should ensure that a
Confidentiality Agreement is executed covering the disclosure.
Employees should disclose to the IP Group ideas and concepts that have
not previously been incorporated in CTS products. This includes entire
products as well as features that are new to CTS. It is especially
valuable to disclose new elements that are known to be incorporated in
products produced by other companies. The IP Group uses these
disclosures to review for both patentability as well as ensuring the use
will not infringe the valid IP rights of another. The earlier this
review is performed in the product development cycle, the easier it is
to avoid of potential issues. All employees are strongly encouraged to
disclose ideas and concepts as early in the product development process
as is feasible.
Employees involved in
product, process and related technology development are encouraged to
keep accurate, dated notes (or other records), describing their ideas
and developments in engineering notebooks. These notebooks may
eventually be used in court or the U.S. Patent and Trademark Office to
support CTS’ ownership in that invention. Engineering notebooks may be
obtained from area managers or the Legal Department. These notebooks
are the property of CTS and must be returned at the time of termination
of employment or earlier if requested by CTS.
In addition to
ensuring all product designs are properly reviewed for patentability and
right-to-use issues early in the development process, employees must
also ensure that patents are properly pursued on inventions and
technology important to CTS. The patent attorney responsible for a case
will request assistance including reviews, drafting of supporting
documentation, identification of distinctions over prior patents and
publications, and submission of any relevant patents or publications of
which the inventor is aware. Inventors must timely complete reviews and
documents needed in support of patent applications as requested and
directed by the IP Group.
A. Identification of
Copyrights for Ownership
is available for any original work of authorship that is fixed in a
tangible medium. Much of the work created by CTS is subject to
copyright protection. A copyright notice is not required on a work in
order to have the benefits of copyright ownership. Certain works at CTS
should be identified as subject to copyright protection to ensure
knowledge by recipients of the information. These include: engineering
drawings, any source code that is developed and shared outside CTS,
public reports and articles submitted by CTS employees.
B. Outside Development
As a general rule,
copyrightable works developed by an outside supplier must be developed
under an explicit agreement assigning rights to CTS in order for CTS to
own the copyright to the work. Even though CTS is paying for an outside
supplier to draft or prepare a work subject to copyright protection, CTS
will likely not be the owner without a specific assignment. Absent
copyright ownership, CTS may be unable to use or make copies of the
work. It is therefore important that the IP Group review any agreements
for the development of such works. These include: photos for sales
brochures, software developed for CTS, web design efforts and any other
similar original works.
C. Other Copyrights
CTS has a policy of
not knowingly infringing any valid IP rights. This specifically
includes copyright. General Policy 22 prohibits the unauthorized
reproduction of software. Similar rules apply to all other copyrighted
works. Employees shall assume that all original works are subject to
copyright and not copy such works without permission of the copyright
holder. If an employee has a question about a specific article or work,
it should be referred to the IP Group for a proper determination.
A. Identification of
Trademarks can serve
to identify products and services associated with CTS. These can
frequently assist our customers in associating positive features of our
products with our product names and categories. Whenever a product is
being marketed and a name provides a business advantage, that name
should be identified to the IP Group prior to any public use.
B. Searches and
After a name is
identified to the IP Group, the responsible attorney will undertake a
search of similar names registered or in use on other products or
services. The responsible attorney will provide details as to the
potential for registering the name along with the relative advantages of
alternative usage of the mark.
IV. Trade Secrets and Confidential Information
Trade secrets are
considered to be any piece of information or idea that has economic
value and derives that value from being a secret. Examples are
processes that aid in the manufacture of products but are not known
outside CTS and customer lists. Employees have a duty to keep all CTS
information confidential and to disclose such information only to other
CTS employees with a need to know. Information identified as trade
secret should also be subject to additional limitations including
limited access to the information (even among CTS employees) and storage
of information in areas (or drives, if in a computer medium) that have
access limited to authorized personnel. Such information should also be
well documented with a copy delivered to the IP Group.
CTS employees should
disclose all new inventions and ideas. This is true whether or not the
inventions or ideas are believed to be patentable. For some inventions
it is difficult to identify infringements by other companies; other
inventions may provide a significant advantage to CTS, even though they
may not be patentable. These disclosures will typically be treated as
trade secrets by CTS. The IP Group, in conjunction with the patent
screening and review committees, will review these disclosures and
determine whether to hold them as trade secrets. Employees should
disclose all such ideas to ensure they are properly reviewed.
Continuing Duties of Confidentiality
The duty to keep CTS
confidential and trade secret information in confidence extends beyond
termination of employment. Employees must keep this information in
confidence and not disclose or use the information at any later places
of employment, regardless of whether the new employment competes in any
way with CTS.
expects employees to keep information, received under a duty of
confidentiality from any source prior to employment with CTS
confidential and not disclose or use such information at CTS. Any
questions regarding disclosures should be referred to a member of the IP
ETHICAL STANDARD NO.
CTS is required
by law to maintain certain types of corporate records. CTS requires
that such corporate records be kept in a manner that fairly and
accurately reflects the business transactions and other information that
is being recorded. Such records must also be preserved and retained, as
required by law. CTS also maintains a system of internal accounting
controls. Any improper handling of CTS funds and assets is strictly
forbidden. Employees who believe that improper financial reporting or
handling of funds or assets has occurred are expected to report their
concerns either to their supervisor, any member of management, the
General Counsel, the director of the corporate internal audit
department, or, if they prefer, to the Chairman of the Audit Committee
of the Board of Directors.
CTS has a responsibility to properly record, preserve and report
financial information in an accurate and timely manner to investors,
government agencies, shareholders and others. Federal securities laws
require CTS to maintain accurate reasonably detailed records which
fairly reflect CTS’ transactions and the acquisition/disposition of
assets. CTS is also required to maintain a system of internal
accounting controls. The purpose of this policy is to describe the
standards to be maintained in order to meet these obligations.
It is the policy of CTS Corporation to follow generally accepted
accounting principles and standards, (or equivalent in foreign
jurisdictions), as well as all applicable laws, regulations and CTS
practices for accounting and financial reporting. Furthermore, it is
CTS’ company policy to maintain complete and accurate records and
accounts to accurately reflect all business transactions and the
acquisition/disposition of CTS assets. Additionally, CTS will only
release financial information upon proper authorization and then only
after due consideration to the interest of CTS as a whole.
In furtherance of this policy, all CTS employees shall be responsible
Follow all accounting, reporting and controllership procedures
established by the Senior Vice President and Chief Financial Officer or
his or her designee.
Be accurate, timely and complete in preparing and maintaining all
required records and reports.
Obtain all required management approvals before releasing
financial information outside CTS (refer to CTS General Policy No., 3
“Dissemination of Information” for specific guidance).
Insure that all financial records and reports, whether in hard copy or
electronic/computer-based format, are securely maintained.
Grant CTS internal and external auditors and other authorized
individuals access to all appropriate CTS records and provide them with
accurate and complete information as they may from time to time require.
Promptly report any concerns about possible violations of this policy
to the Senior Vice President – Chief Financial Officer or to the CTS
ETHICAL STANDARD NO. 13:
CTS is committed
to providing accurate information to the public in a timely, orderly and
consistent manner. CTS will comply with applicable laws and regulations
regarding the selective disclosure of material, nonpublic corporate
CTS prohibits the
selective disclosure of material, nonpublic corporate information to
securities market professionals, investors and potential investors,
unless the communication is made:
To a person who has
signed a confidentiality agreement;
To a rating agency,
for the sole purpose of developing a credit rating that will be publicly
In connection with a
securities offering that is exempt from Regulation FD requirements.
“material” if there is a substantial likelihood that a reasonable
shareholder would consider it important in making an investment
decision. “Nonpublic” information is any information that has not been
disseminated in a manner reasonably designed to make it generally
available to investors.
The Chief Executive
Officer and the Chief Financial Officer have been designated as the
spokespersons for the Company. The Chief Executive Officer may from time
to time designate other persons to speak on behalf of the Company with
respect to a specific issue or to respond to specific inquiries from the
investment community or the media. The individual with primary
responsibility for the Investor Relations function (hereinafter,
“Investor Relations”) shall be responsible for scheduling and preparing
presentations to the investment community and the media. No one other
than a designated spokesperson is authorized to speak on behalf of the
Company to the investment community or to the media. Any unauthorized
person who receives an inquiry from the investment community or the
media must immediately refer the inquirer to a designated spokesperson.
CTS will disseminate
material information through a Form 8-K filing or by the use of another
method, such as a news release, that is reasonably designed to provide
broad, non-exclusionary distribution of the information to the public.
The Chief Executive Officer, Chief Financial Officer and Vice President
and General Counsel shall determine the method of disclosure. If a Form
8-K filing is used, then material information will not be disclosed to a
select audience until CTS has received confirmation that the Form 8-K
has received a “filing date” on the SEC’s EDGAR electronic filing system
that is no later than the date of disclosure to the select audience. If
a method of disclosure other than a Form 8-K is utilized, then the
material information will be publicly disseminated either before or,
under certain circumstances, simultaneously with, the communication of
such information to selected members of the investment community.
The reporting of the
Company’s disclosures will be monitored by Investor Relations, to ensure
accurate reporting and to take corrective measures, if necessary. All
new material disclosures will be incorporated into the Company’s
disclosure record, which shall be maintained by Investor Relations.
In the event that,
despite the precautions taken by the Company, there occurs an
unintentional disclosure on a selective basis of material, nonpublic
information, the Company will make prompt, public disclosure of the
disseminated information as soon as reasonably practicable. Commencing
from the time that a senior official of the Company (who knows, or
should know, that the information disclosed was material and nonpublic)
learns of the selective disclosure, such public disclosure shall occur
within twenty-four hours or by the opening of the next day’s trading on
the New York Stock Exchange, whichever is later.
Each CTS employee is
Learn how each CTS
Ethical Standard and CTS policy relates to your job, and follow its
Know that violation
of any CTS policy by a CTS employee will result in disciplinary action,
up to and including termination of employment.
Promptly report any
concerns about potential or actual violations of any CTS policy.
Concerns may be reported anonymously, twenty-four hours per day, toll
free or via internet. [Employees are provided with specific
instructions for such reporting.]
Use good judgment
and common sense and demonstrate a high degree of personal integrity and
honesty at all times, even in situations that are not specifically
addressed by this Code of Ethics or by a CTS policy.
IF YOU NEED
ASSISTANCE . . .
If you need more
information or have questions about any CTS policy, or if you need to
report a concern, please contact your supervisor or any member of the
management team at your facility, or contact the Vice President and
General Counsel, or another lawyer in the CTS Legal Department, at the
CTS Corporate office, tel. no. (574) 523-3800.
WHAT SUPERVISORS AND
MANAGERS NEED TO KNOW
In most cases a CTS
supervisor or manager will be the first person contacted by an employee
who believes that a CTS policy has been, or may be, violated.
Supervisors and managers therefore play a special role in assuring
compliance with this Code of Ethics, CTS policies and applicable laws
and regulations. As a CTS supervisor or manager, you must:
familiar with CTS' policies so that you can inform your subordinates
about the existence of policies that relate to their jobs. You should
be able to explain the general principles of relevant policies to
employees. Tell your subordinates that you expect them to follow the
Be perceptive as to
potential problems or compliance issues that could arise in your area of
Don't "look the
other way" if you learn about a potential or actual problem or issue;
you have an obligation to report it immediately so that prompt action
can be taken, if necessary.
Be aware that
violation of any CTS policy by a CTS employee will result in
disciplinary action, up to and including termination of employment.
IF YOU NEED
ASSISTANCE . . .
If you need more information or have questions about any CTS policy, or
if you need to report a concern, please contact your manager or another
member of the management team at your facility, or contact the Vice
President and General Counsel, or another lawyer in the CTS Legal
Department, at the CTS Corporate office, tel. no.
QUESTIONS AND ANSWERS
Q. If I see someone
violating a CTS policy, what should I do?
A. In most
cases, the first thing that you should do is talk to your supervisor
about what you saw or heard. If there is a reason why you feel
uncomfortable discussing the issue with your supervisor, then you should
approach another member of the management team at your facility or
business unit about this issue. Often, the Human Resources Manager is
the person who employees will want to contact. However, if there is
another member of management with whom you are more comfortable, then
talk to that person about the specifics of the situation that you have
Q. What if I talk to
my supervisor about a policy issue but I am not satisfied with his or
another manager at your facility or business unit. If, after discussing
the situation with the manager, you still have questions or concerns,
then call the CTS Corporate office, tel. no. (574) 523-3800, and ask to
speak with the General Counsel or with another lawyer in the CTS Legal
Q. Can I get in
trouble if I report misconduct?
A. CTS prohibits
retaliation against any individual who in good faith reports violations
of CTS’ policies and ethical standards or who cooperates in an
investigation of such violations or other misconduct. Retaliation
should be reported immediately. Retaliation will not be tolerated and
will subject the violator to disciplinary action.
Q. I'm a supervisor
at a CTS business unit. If an employee comes and tells me about a
possible violation of a CTS Ethical Standard or a CTS policy, what
should I do next?
A. Don't try
to investigate the matter yourself. You should contact your own manager
or the General Manager of your facility, if appropriate. That manager
should then contact the CTS Legal Department. If, under the specific
circumstances, it seems more appropriate for you to contact the CTS
Legal Department directly, then do so. The Legal Department will advise
both you and, if applicable, your manager or the General Manager, as to
how the investigation should be handled.
Q. A competitor told
me that "we're killing each other by trying to take away each other's
long-standing customers with lower prices." She suggested that both our
companies would be better off if we stuck to selling to our own
long-term customers. Can we do this?
A. No. You must not
enter into agreements or understandings with competitors to allocate
customers, territories or product lines. Like price-fixing, such
agreements can result in criminal prosecution of you individually, as
well as the company. Even suggestions to a competitor to fix prices or
to divide up customers, the territory or product lines can result in
criminal prosecution. Not only should you immediately and clearly
reject the competitor's suggestion, but you should contact a lawyer in
the CTS Legal Department immediately to report the competitor's request.
Q. A former
colleague of mine at CTS now works for a competitor. He called me the
other day and wants to have lunch with me. Is it okay if I go?
A. It's all right to
have lunch with your former colleague, but limit your discussion to
non-business subjects. Report the contact with the competitor's
employee to the Vice President and General Counsel at tel. no. (574)
523-3800, so that it can be properly documented.
Q. We have one
product that is selling very well, but another one that is not. One of
our sales and marketing people came up with the idea that we could
require customers who buy the hot-selling product to also buy the other
product. What do you think of this idea?
likely, it's illegal. It can be a violation of antitrust laws to
condition the sale of one product on the purchase of another. You
should immediately contact a lawyer in the CTS Legal Department, who
will analyze the facts and circumstances of this specific situation and
research applicable law.
Q. Sometimes a
customer will tell me that our prices are higher than a competitor's
prices. Can I ask the customer for copies of my competitor's proposals?
A. Yes. You
can receive such information from customers. However, you should
carefully document in your files the source of any competitive
information, to avoid any later allegations that the information was
obtained through improper communication with a competitor. You may want
to contact the CTS Legal Department regarding how to document this
Q. Sometimes at
trade association meetings, the talk turns to the state of the market
and where people expect prices to go. Is it okay to participate in
A. No. You
should not participate in or even remain at a meeting of competitors at
which current or future prices are discussed. You should clearly voice
your objections to such discussions and leave the meeting. When you
return to CTS, call the CTS Legal Department and report the incident to
the Vice President and General Counsel.
Q. If a supplier
offers me two tickets to a ballgame, do I have to refuse to accept them?
A. Usually, picking
up the check, or letting someone else pick up the check, at a business
lunch or dinner, or a trip to a sporting event or to the theater, is
permissible. Courtesies of this type are of nominal value and are not
likely to influence decisions about business issues. Any gifts or
entertainment that would unduly influence a business relationship are
prohibited. Gifts of money are never permissible under any
circumstances. In general, you should not provide or accept gifts of
more than nominal value or entertainment of greater than usual or
customary expense. You should not accept gifts or entertainment of even
nominal value if you know or have reason to believe that the gift or
entertainment is being provided only to obtain a favorable business
decision or order.
Q. Can I own
stock in a company that is a supplier to CTS? If so, is there a limit
to how much stock of a CTS supplier I can own?
A. An employee
should not own any substantial amount of stock or other financial
interest in, or participate in the business of, an actual or potential
supplier of goods or services to the Company, if that employee is
directly or indirectly involved in the Company’s business with the
supplier. The definition of what constitutes a “substantial” amount of
stock or other financial interest will depend on the particular facts
and circumstances in any given case. If you are in doubt, contact the
Vice President and General Counsel with the specifics of the situation
before purchasing the stock.
Q. I'm thinking of
doing some engineering consulting work on the side, while still employed
at CTS, to supplement my income. Is there anything wrong with that?
A. Yes. In
general, CTS expects its employees to devote their full attention and
their talents to their jobs with CTS. Moreover, if you are doing work
for others that is the same or similar to the work that you are doing
for CTS, you may be using knowledge and skills acquired as a CTS
employee to pursue your outside business interests. This is a clear
conflict of interest. There could also be an issue as to whether you
are misappropriating CTS proprietary information or other intellectual
property. Activities of this type could result in the termination of
your employment with CTS.
Q. A female
salesperson told me, her supervisor, that the buyer for one of our major
customers keeps asking her for a date. She says this makes her very
uncomfortable. Since the buyer isn't a CTS employee, do I have to do
anything about this?
A. Yes. The
female salesperson is a CTS employee who has complained to you that she
is being sexually harassed. CTS can be held liable if you do nothing
about her complaints. You must immediately report her complaint so that
an investigation can be performed and appropriate action can be taken.
CTS' obligations with respect to ethics and legal compliance sometimes
extend beyond the boundaries of our own property and our own work
force. Use your good judgment and common sense in situations where it
appears that an unethical, immoral or illegal act may be taking place.
If you need assistance, contact your Human Resources Manager or the CTS
Q. What if an
employee tells me about a situation that sounds like a policy violation,
but then asks me to keep the information confidential. The employee
specifically says to me, "Look, you didn't hear this from me."
A. You must tell the
employee that, as a CTS supervisor or manager, you have an obligation,
as part of your job, to report what the employee has told you. You may
tell the employee that, to the extent possible, you will try to keep his
or her identity confidential, but you must explain that investigation of
the situation is likely to mean that the employee will not be able to
remain anonymous. Do not ever promise confidentiality to an employee
who reports a possible violation of the law or of a CTS policy or rule.
Q. Our production
managers disagree about what type of guarding device to install on a
piece of equipment, so as to best comply with OSHA regulations. Who can
help us interpret the regs?
Corporate Environmental, Health and Safety Specialist, who reports to
the Manager Environmental Services, can provide you with assistance in
interpreting OSHA regulations and in dealing with safety issues,
including guarding. The CTS Legal Department works closely with the
people in the Corporate EHS Department to make sure that CTS complies
with all laws and regulations related to health and safety. You can
reach the Corporate Environmental, Health and Safety Specialist and the
lawyers in the CTS Legal Department by calling the CTS Corporate office
at tel. no. (574) 523-3800.
Q. If a minor policy
violation has occurred but no real damage has been done, is it necessary
to take any disciplinary action against the employee involved?
A. Yes. Even
if nothing happened this time, you cannot risk having this employee
continue to conduct himself in a manner that could result in damage to
CTS' reputation or in monetary loss to CTS. Corrective action should be
taken so that the employee understands why what he did was improper and
recognizes that such conduct in the future could cost him his job with
CTS. Talk to your Human Resources Manager and/or contact the CTS Legal
Department concerning the type of disciplinary action that would be
appropriate, based on the specific facts and circumstances.
Q. I work in the
accounting department at a CTS business unit. In reviewing the records
related to a multi-million dollar project, I noticed a small discrepancy
between a consultant's invoice and the amount we actually paid. Since
the discrepancy is very small in the context of the total project, do I
need to take any action to report the discrepancy?
Discrepancies of even small amounts may indicate serious problems if
they reflect deliberately dishonest behavior.
Q. Does CTS use
child labor in foreign countries where this is an accepted business
A. No. CTS will not
utilize child labor, even in geographic locations where this may be an
accepted business practice.