Living Our Values – Ethics and Integrity

El Paso is committed to conducting business with the highest ethical standards. Our commitment is based upon a set of non-negotiable values—stewardship, integrity, safety, accountability, and excellence—and shared accountability to do the right thing, without exception. Our values are also the foundation for our Code of Business Conduct. The Code outlines a principles-based system that shapes how we conduct ourselves and our business, including our expectations for complying with both the spirit and the letter of all applicable laws, El Paso’s values, and ethical principles. The Code provides us with an ethical decision-making model to help us make the right decisions with shareholders, colleagues, customers, vendors, and the communities in which we operate.

Responses to our 2008 employee survey showed that El Paso employees support our values and understand the importance of applying our ethics to day-to-day decisions. In the survey, 99 percent of employees said they consider ethical and compliance implications when making decisions in their daily work and 98 percent said they fully support El Paso’s values.

We understand the importance of maintaining this high level of ownership and engagement regarding our ethics and values. To this end, we provide a variety of resources to help employees remain engaged.

We have a strong commitment to ethical standards among our executive leadership and senior management. The Board of Directors and Board Audit Committee are actively involved in the oversight of our policies and procedures governing ethics and compliance. We also have an Ethics and Compliance Committee, consisting of the company’s senior management, and a dedicated staff in the Ethics and Compliance Office. The Ethics and Compliance Office is led by our Chief Compliance Officer, who briefs the Board Audit Committee.

This year’s Ethics and Compliance Office communications included monthly ethics features on El Paso Today. These pieces focused on the importance of ethics and values, as shared by our senior executives, and served to remind employees of our Ethics and Compliance policies.

We provide training courses on ethics and compliance matters throughout the year to all employees. These courses are available in the native language of each country in which we operate. We also conduct specialized training in key areas affecting our employees. For example, when the Federal Energy Regulatory Commission’s new Standards of Conduct were enacted in November 2008, our Ethics and Compliance Office coordinated a training guide addressing the new rules. By the end of the year—less than two months later—all of our employees impacted by these new regulations had completed the training.

We also reinforce our commitment to the Code through our compensation structure. Employees must complete ethics and compliance training to qualify for annual incentive compensation. In 2008, 100 percent of our employees achieved their certificate of compliance.

Employees have available a number of tools and resources for asking questions, voicing complaints, or raising issues regarding ethics and compliance. Options include contacting the Ethics and Compliance Office directly or calling a 24-hour toll-free helpline operated by a third-party vendor on an anonymous basis, if they so choose.

Although El Paso prides itself on being a company that values integrity, there are instances in which ethical violations occur. We have a process for addressing issues when they arise. This process is applied consistently and in a fair manner across the organization. For each reported incident, a full review of the facts is conducted. In 2008, we opened more than 180 cases to investigate various allegations, complaints, and inquiries made during the year.

These matters varied widely, including business integrity, misappropriation of company assets, conflicts of interest, diversity, and work environment issues. We take these investigations seriously and follow through with appropriate and immediate action when warranted. Depending on the severity of the issue, actions taken during the year ranged from reprimand to termination⁴.

Ethical behavior is a shared obligation at El Paso. Employees are responsible for listening to and respecting diverse opinions, positions, and perspectives and treating others as they want to be treated. Leaders are accountable for addressing ethical issues as they occur and serving as role models for respect.

⁴In 2008, nine employees were terminated for violations of our Code of Business Conduct following investigations of allegations or
complaints made through our process. Other cases were addressed through oral and written reprimands.