Caterpillar: Organizational Structure and Corporate Management Controls

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ORGANIZATIONAL STRUCTURE/CORPORATE MANAGEMENT CONTROLS

➢ Corporate Governance Mission Statement:
o Caterpillar’s corporate governance program ensures we serve the interests of stockholders and other stakeholders with the highest standards of responsibility, integrity and compliance with all laws. These standards are guided by our board of directors and global management team, who work to oversee the company’s actions, performance and governance policies. ➢

➢ Announced that it is aligning its machine product and marketing organizations to sharpen customer focus, position the company to build deep expertise in product development. ➢ A key change in the aligned structure is the creation of five end-to-end Machine Business Divisions: Mining, Quarry & Waste, Excavation, Earthmoving and Building Construction Products. ➢ The alignment also introduces three new regional Distribution Services Divisions within Caterpillar, replacing the company's current marketing arms. They will have responsibility for Caterpillar's total portfolio of business with each dealer, the dealer relationship, dealer development and ensuring the most efficient and effective distribution of Caterpillar machines, engines and parts. ➢ Caterpillar's current Motion & Power Control Division will be expanded and reorganized into two new divisions; The Advanced Systems Division & The Core Components Division (engineering and supply base for hoses and tubes, filters and common components like tires, bearings, fasteners and seals) |Caterpillar strives to make its governance standards and principles transparent. Key points and significant changes in our standards and | |principles, as well as the overall evolution of our key governance decisions, are highlighted here. | |Corporate Governance: Highlights | |Our Code of Worldwide Business Conduct, first published in 1974 and last amended in 2010, sets a high standard for honesty and ethical | |behavior by every employee. | |In 1999, the Caterpillar Board developed and published guidelines on corporate governance, which among other provisions includes the | |establishment of a fully independent Board of Directors, with the sole exception of its Chairman, and a fully independent Compensation | |Committee. | |In advance of the 1999 report of the Blue Ribbon Committee on Audit Committee Effectiveness, Caterpillar had already implemented many of | |its recommendations, including a fully independent Audit Committee with a financial expert as chairman. | |In 1993, Caterpillar's Board adopted written charters for each of its committees, which the recently passed Sarbanes-Oxley Act only now | |makes mandatory. | |In 1992, the Caterpillar Board adopted a confidential voting policy for shareholders. | |While not required by law, Caterpillar established share ownership guidelines in connection with stock option grants for corporate officers| |and directors over a decade ago. All of Caterpillar's equity-based compensation plans have been approved by shareholders. Furthermore, | |Caterpillar has never offered golden parachutes to any company officers and has never repriced stock option grants. | |On June 17, 2005, Caterpillar Inc. executed a Fourth Amended and Restated version of its Shareholder Rights Plan with Mellon Investor | |Services LLC. The modified...
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