Corporate Governance

Code of Conduct - Sears Holdings Corporation

TABLE OF CONTENTS

I. 

INTRODUCTION

II. 

GENERAL

III.

POLICIES

ACCOUNTING AND REPORTING PRACTICES

ANTITRUST

CHARITABLE CONTRIBUTIONS AND POLITICAL ACTIVITIES

BRIBERY AND CORRUPTION

COMMUNICATIONS

CONFIDENTIAL INFORMATION AND PRIVACY

CONFLICTS OF INTEREST / PERSONAL BENEFITS

CUSTOMS AND IMPORT

ENVIRONMENTAL LAWS

FRAUD

GOVERNMENT CONTRACTS

INTELLECTUAL PROPERTY

PRODUCT SAFETY

SECURITIES LAWS

USE AND PROTECTION OF COMPANY ASSETS

VENDOR SAMPLES

VENDOR STANDARDS

WORKPLACE

IV. 

REPORTING PROCEDURES

V. 

BUSINESS PRACTICES COMMITTEES

VI. 

SENSITIVE INVESTIGATIONS COMMITTEE

 

  

 I. INTRODUCTION

Sears Holdings Corporation (“SHC” or “Company”) values honesty, integrity and adherence to the highest ethical standards. As associates, each of us has a responsibility for upholding these values and maintaining a commitment to basic principles of business ethics and good judgment. As part of this commitment, SHC has instituted a series of policies and procedures to reaffirm its dedication to the highest ethical standards.

Attached is the SHC Code of Conduct. The Code applies to all officers and associates of the Company and its wholly-owned subsidiaries, including Sears, Roebuck and Co., Kmart Holding Corporation and their subsidiaries. The Code embodies our values and sets forth the principles to guide our behavior. It is important for each of us to fully understand these principles and to commit ourselves to them in all our business activities. It is up to each of us to ensure that all of our business relationships are conducted with integrity and honesty and reflect the letter and spirit of the Code. A good starting point is to act with integrity in everything you do and to never engage in behavior that would undermine the reputation of SHC, your peers or yourself. If you would be ashamed to have your friends and family read about what you did at work today in tomorrow morning’s newspaper, then don’t do it.

This Code of Conduct reflects our values and defines the common sense behaviors required of all of us to ensure that SHC maintains legal and ethical business practices.

We believe abiding by the Code will make SHC a better, more profitable company.

Edward S. Lampert
Chairman and Chief Executive Officer
Sears Holdings Corporation

 

  

 II. GENERAL1


1 This Code is not a contract of employment, and does not create any contractual rights between you and Sears Holdings Corporation or any of its subsidiaries. Employment at SHC is on an “at-will” basis. This means that you can terminate your employment whenever you wish, for any reason, just as SHC may terminate your employment at any time, with or without notice, with or without cause. 

 

 


Where local country laws contain requirements that conflict with this Code, those requirements apply for associates working in those countries.

This Code supersedes all other policies, procedures, instructions, practices, rules or verbal representations of SHC to the extent they are inconsistent. However, after consultation with and approval of the Office of Compliance and Ethics, individual business units may adopt procedures that are more restrictive than this Code.

  

 III. POLICIES

 


ACCOUNTING AND REPORTING PRACTICES


SHC and its associates must follow generally accepted accounting principles and maintain appropriate control policies and procedures. The law requires accurate and reliable business records; accordingly, all assets, liabilities, income and expenses shall be correctly identified and accurately recorded in the appropriate corporate books of account. False or misleading entries or exclusions are unlawful and are not permitted. Management and internal and independent auditors and examiners must be given access to all information necessary for them to conduct appropriate reviews. SHC and its associates shall provide full, fair, accurate, timely and understandable disclosure in reports and documents that SHC files with the Securities and Exchange Commission and in other public filings and communications made by the Company.

Issues regarding accounting, internal accounting controls, and auditing matters should be directed to the Ethics Hotline at 1-800-8ASSIST, or in writing to the Audit Committee Chairperson, c/o Corporate Secretary, 3333 Beverly Road, B6, Hoffman Estates, IL 60179.

 


ANTITRUST


SHC is subject to complex antitrust laws designed to preserve competition among enterprises and to protect consumers from unfair business arrangements and practices. You are expected to comply with these laws at all times. Many situations create the potential for unlawful anti-competitive conduct and should be avoided. These include, for example:

The monetary fines for antitrust violations can be high, and the cost to SHC’s reputation even higher. If you have any questions about potential antitrust implications, consult with SHC’s Law Department.

 


CHARITABLE CONTRIBUTIONS AND POLITICAL ACTIVITIES


SHC encourages our associates to become involved in community activities and charitable organizations. However, no associate may bring undue pressure on another associate to contribute to a charitable organization. SHC respects the rights of our associates to participate in the political process. Indeed, engaging in the process builds a stronger community and a better political system. However, you must at all times make clear that your views and actions are your own, and not those of SHC. Additionally, associates may not use Company time or resources to support personal political activities or use their position to coerce or pressure associates to make contributions or support a candidate or political cause.

 


BRIBERY AND CORRUPTION


SHC takes a zero-tolerance approach to all forms of bribery and corruption, including commercial bribery as well as bribery of government officials.  You are expected to conduct business at all times in an honest and ethical manner, in full compliance with all anti-bribery and corruption laws and regulations, including the Foreign Corrupt Practices Act, the U.K. Bribery Act as well as all applicable laws where SHC operates.  It is a violation of the Code of Conduct as well as the SHC Anti-Bribery and Anti-Corruption Policy to: (i) offer, promise, pay, approve, request, receive or agree to receive, directly or indirectly, any kickback or bribe, including money or its equivalent, gifts, favors, personal services, travel or accommodation, samples for personal use, or anything of value, to or from any person or entity, or from their agents or representatives, for the purposes of  obtaining or retaining business or for any improper business purpose; or to (ii) fail to accurately maintain SHC books and records or follow internal SHC accounting or other internal controls.  SHC further prohibits any activity that creates the appearance of improper conduct or could create an impression of bribery or corrupt business practices.

 


COMMUNICATIONS


 


CONFIDENTIAL INFORMATION AND PRIVACY


While working at SHC, and after you cease employment with SHC, you must protect confidential, non-public information that you obtain or create for SHC. You must take precautionary measures to prevent unauthorized disclosures of confidential information. This includes ensuring that access to work areas and computers is properly controlled, and refraining from discussions of sensitive matters in public places, such as elevators, hallways, restaurants, restrooms, etc.

You must not disclose proprietary or confidential information about SHC, other associates(if the proprietary or confidential information relating to SHC associates was obtained in violation of law or lawful Company policy), vendors, or customers, to anyone (including other associates) not authorized to receive it or with no need to know the information. Not disclosing confidential information means not communicating the information by any means including, without limitation, orally, in writing, or electronically (e.g., in person or via telephone, mail, fax, email, Internet “chat rooms,” posting to community bulletin boards, or otherwise). In addition to the foregoing, you are also prohibited from using any proprietary or confidential information for any unauthorized purpose, including for your own personal gain.

 


CONFLICTS OF INTEREST / PERSONAL BENEFITS


As an associate, you must be sensitive to any activities, interests or relationships that might interfere with, or even appear to interfere with, your or any other associate’s ability to act in the best interest of SHC. Because it is impossible to describe every potential conflict, SHC relies on your commitment to exercise sound judgment, to seek advice when appropriate, and to adhere to the highest ethical standards in the conduct of your personal and professional affairs.

If you have a family member, close friend or other person with whom you have a close personal relationship who has an interest in or is employed by a competitor or a vendor, you are required to disclose the nature of the relationship to your area’s Senior Vice President and the Office of Compliance and Ethics. If you are at all unsure as to whether a conflict of interest exists due to a business relationship involving any such person, you should discuss the relationship with your supervisor and the Office of Compliance and Ethics to determine the best course of action.

 


CUSTOMS AND IMPORT


U.S. laws govern SHC’s conduct regarding international trade. Several U.S. laws restrict or prohibit trade with certain countries. You are expected to comply with all U.S. export restrictions, as well as applicable export control laws of each country in which SHC business is conducted.

 


ENVIRONMENTAL LAWS


SHC is committed to being an environmentally responsible corporate citizen. You are expected to comply with or exceed all applicable laws and regulations related to the environment in each of our facilities. We encourage associates to minimize the impact of the Company’s business operations on the environment with methods that are socially responsible and economically sound.

 


FRAUD


It is the policy of SHC to comply with the law and to maintain accurate records of Company business. All associates are responsible for recognizing and reporting fraud, falsification of records, or other irregularities. Managers should become familiar with the types of irregularities that might occur in their area of responsibility and must establish standards and procedures designed to prevent and detect irregularities.

Fraud applies to any irregularity or suspected irregularity related to Company business and involving associates, vendors, or persons providing service or materials to the Company. Irregularities include, but are not limited to, the following:

Associates must immediately report any suspected irregularity or act of fraud to the Ethics Hotline or the Office of Compliance and Ethics. The Company’s ability to investigate and remediate fraud successfully depends on prompt and confidential reporting. If you suspect fraud, do not discuss the matter with any of the individuals involved, do not attempt to investigate or determine facts on your own, and do not discuss your suspicions with anyone unless specifically directed or authorized to do so by a member of the investigations team.

All investigations under the Code of Conduct, including those regarding allegations of fraud or other irregularities, will be under the direction of the Office of Compliance and Ethics, which will coordinate with the Law Department, Human Resources and the affected area(s), as necessary and appropriate.

Associates must cooperate with any investigation and provide accurate and truthful information. Associates must not disclose or discuss the fact that an investigation is being conducted or has been conducted, and must not disclose the results of any investigation to anyone except those persons in the Company or law enforcement who need to know in order to perform their duties, or except as otherwise required by law.

 


GOVERNMENT CONTRACTS


Special rules and regulations apply to companies conducting business with the government. Before engaging in any sales to federal or state governmental agencies or entering into any other business relationship with these agencies, you must consult with and obtain the approval of the Law Department.

 


INTELLECTUAL PROPERTY


SHC owns all inventions, discoveries, ideas, trade secrets, and original works of authorship that an associate conceives or develops either alone or jointly with others during the course of employment or using Company resources. As an associate, you agree to help the Company document SHC’s ownership of this intellectual property, which includes: (i) promptly and completely communicating to SHC management your conception or development of its intellectual property; (ii) maintaining current and appropriate notes, sketches, and other records thereof; (iii) assigning to SHC all right, title, and interest in such intellectual property; and (iv) performing all acts and, on request, executing all necessary and appropriate documents to enable SHC to obtain all right, title, and interest in and to such intellectual property and whatever other legal protection SHC deems appropriate.

SHC has the sole right to determine the terms and conditions of any disposition of its intellectual property, which may be made with or without monetary compensation, and you have no right to share in any monetary compensation or other receipts resulting from the intellectual property.

 


PRODUCT SAFETY


SHC is committed to offering quality, safe products, including our food offerings. We require our vendors to warrant that products sold to SHC will comply with all applicable laws. Strict compliance with the Company’s food storage and handling, facility maintenance and other related procedures collectively constituting SHC’s Food Safety Policy is mandatory. The Company may be subject to monetary penalties, costly litigation, and negative publicity for violating product safety laws. If you see or suspect any product safety violations, you should immediately report it to ensure that unsafe products are removed from sale to the Law Department or email: productsafety@searshc.com.

 


SECURITIES LAWS


All associates are required to comply with the federal laws and the Code of Conduct regarding the disclosure and use of material non-public information. Anyone who possesses material non-public information and who buys or sells stock or other equity securities of Sears Holdings Corporation or any other public company, or “tips” another investor, may be liable for damages, civil and criminal penalties and may also be subject to disciplinary action by SHC. In order to avoid violations of law and/or the Code of Conduct, you should follow these specific guidelines:

Insider Trading

It is illegal to trade in securities based on inside information. Inside information is any information about SHC or another company that has not reached the public and is likely to be considered important by investors in deciding whether to buy or sell publicly traded securities. Examples include news about SHC’s financial results before it is formally released, planned actions regarding SHC stock, and unannounced senior management changes. Inside information also includes non-public information about other companies that you receive in the course of your employment.

Associates who have access to inside information hold special positions of trust and confidence, and must not abuse this trust. Never trade in securities or other property based on inside information, or “tip” others who might make an investment decision based on this information. Trading under such circumstances is illegal, whether you trade for your own benefit or for the benefit of others. Do not take advantage of inside information when buying or selling SHC stock, options in SHC stock, or the stock of any supplier or customer of SHC or one of its subsidiaries. This applies whether you act directly or through someone else, such as a family member. Stricter standards apply to officers and certain other manager-level associates. Contact the SHC General Counsel or Associate General Counsel of Corporate and Securities Law if you have any doubts about the information you use to help make buying or selling decisions.

 


USE AND PROTECTION OF COMPANY ASSETS


During the course of employment with SHC, associates are entrusted with numerous assets belonging to the Company. These assets include not only cash and financial assets, but also computers, telephones, supplies, inventory, and other equipment and technology belonging to SHC. These assets are intended for Company business use, and you have a responsibility to protect these assets. Personal use is generally prohibited. Any act involving fraud, theft, embezzlement or misappropriation of Company assets is strictly prohibited. Company assets such as computers, email, and telephone systems may be monitored by the Company to promote quality control and confirm appropriate use.

If separated from the Company, you agree to return to SHC all Company property at the time of separation, including laptops, pagers, cell phones, Blackberry devices, and any other Company property.

Outdated, excess, or otherwise unneeded assets of SHC (e.g., supplies, fixtures, equipment, etc.) are the property of SHC and may not be disposed of without permission from Loss Prevention. Associates may not directly or indirectly purchase such assets unless for sale at a designated selling location.

SHC has a detailed Document Retention Policy. Document retention applies not only to printed correspondence, but also to electronic correspondence. If you have any questions, please refer to the Document Retention Policy or the Law Department.

 


VENDOR SAMPLES


Samples of merchandise from vendors that are not returned to the vendor are the property of SHC. Under no circumstances may an associate accept, keep, or purchase a sample directly from a vendor. All samples must be disposed of through a sales location designated by the Company or, if not saleable, either given as a charitable donation to a charity designated by the Company under the supervision of Loss Prevention or destroyed as designated by Loss Prevention.

 


VENDOR STANDARDS


SHC is committed to doing business with vendors who conduct business ethically and legally. SHC vendors are expected to sign SHC’s Vendor Business Practice Statement. SHC may terminate its business relationship with any vendor refusing to sign or comply with SHC’s Vendor Business Practice Statement.

 


WORKPLACE


  

 IV. REPORTING PROCEDURES

Maintaining ethical standards is the responsibility and obligation of every SHC associate. Early identification and resolution of conflict of interest and other ethical issues that may arise are critical to maintaining our commitments to our customers, vendors, investors, and to ourselves and our co-workers. SHC associates are expected to treat compliance with ethical standards as a critical element of their responsibilities. While this Code of Conduct sets forth a wide range of practices and procedures, it cannot address every issue that may arise. If you are unsure of what to do in a situation, you should seek additional guidance and information before you act. If something seems unethical or improper, or if you have questions regarding the best course of action, you should promptly contact any of the following:

The Hotline is operated by specially trained third-party representatives. The Hotline is available 24 hours a day, 7 days a week. Hotline representatives will listen to your concerns, ask questions, and review the information provided. They will then forward your concern to the Office of Compliance and Ethics, which will take appropriate action.

It is against Company policy to retaliate against any associate who raises a concern in good faith and, if requested and to the extent possible, every effort will be made to maintain confidentiality. All reported violations will be acted on appropriately. If your concern requires an investigation, the Company will respond promptly. If possible, you will be informed about the status of the investigation and the outcome of the matter. However, SHC has an obligation of confidentiality to all associates, including those being investigated.

  

 V. BUSINESS PRACTICES COMMITTEES

 SHC has instituted Business Practices Committees (BPCs) as a systematic approach to drive compliance accountability and results in the Company. BPCs serve to:

Specifically the BPCs consist of an Executive BPC comprised of the Office of the Chairman and senior level executives. The business-level BPCs are comprised of SHC’s business unit levels. They are also responsible for driving their business ownership of compliance and setting the standard for adherence to the Code of Conduct.

  

 VI. SENSITIVE INVESTIGATIONS COMMITTEE

A Sensitive Complaint is a complaint containing allegations that:

Any person who has or receives a complaint that he or she believes may reasonably be a Sensitive Complaint should forward that complaint immediately to the SHC Compliance and Ethics Office in a manner that clearly identifies the matter as a potential Sensitive Complaint.

  1. The Sensitive Investigations Committee shall consist of the Chief Compliance Officer, the Senior Vice President of Human Resources, the General Counsel, Executive Vice President/Chief Financial Officer and such persons' designees.
  2. Oversight of Sensitive Investigations: The Sensitive Investigations Committee shall review all Sensitive Complaints and shall initiate and oversee investigations of Sensitive Complaints. The Sensitive Investigations Committee shall determine the necessity of investigations on a case-by-case basis.
    1. The Sensitive Investigations Committee shall have the authority to direct SHC internal resources (e.g., Internal Audit, Corporate Investigations, Law Department) to conduct such investigations. The Sensitive Investigations Committee shall also have the authority to direct the Law Department or outside counsel to engage outside resources to conduct an investigation whenever the Sensitive Investigations Committee determines a conflict of interest exists in using a SHC internal resource, or the nature of the investigation requires outside expertise or perspective.
    2. The Sensitive Investigations Committee shall report to the Audit Committee of the Board of Directors the existence of any Sensitive Complaint regarding accounting, internal accounting controls or auditing matters, and shall keep the audit committee informed of the progress and results of the investigations of such matters.
    3. A member of the Sensitive Investigations Committee who is implicated in connection with a Sensitive Complaint shall recuse himself or herself from involvement in the investigation.

The law and SHC policy require that the Sensitive Investigations Committee conduct effective investigations of Sensitive Complaints. The Sensitive Investigations Committee shall keep a complainant's identity confidential except where disclosure is required to conduct an effective investigation. SHC shall not retaliate against any individual who in good faith submits a Sensitive Complaint or participates in a Sensitive Investigation.

Rev. 1/28/13