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ITT Corporation

 

 

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March 27, 200929, 2011

Dear Fellow Shareholders:

 

Enclosed are the Notice of Annual Meeting and Proxy Statement for ITT’s 20092011 Annual Meeting of Shareholders. This year’s meeting is intended to address only the business included on the agenda. Details of the business to be conducted at the Annual Meeting are given in the accompanying Notice of Annual Meeting and Proxy Statement, which provides information as required by applicable laws and regulations.

 

Your vote is important and we encourage you to vote whether you are a registered owner or a beneficial owner.

 

This year, in accordance with U.S. Securities and Exchange Commission rules, we are again using the Internet as our primary means of furnishing proxy materials to shareholders. Because we are using the Internet, most shareholders will not receive paper copies of our proxy materials. We will instead send these shareholders a notice with instructions for accessing the proxy materials and voting via the Internet. This notice also provides information on how shareholders may obtain paper copies of our proxy materials if they so choose. We believe use of the Internet will makemakes the proxy distribution process more efficient, less costly and helphelps in conserving natural resources.

 

If you are the registered owner of ITT common stock, you may vote your shares by making a toll-free telephone call or using the Internet. Details of these voting options are explained in the Proxy Statement. If you choose to receive paper copies of our proxy materials, you can vote by completing and returning the enclosed proxy card by mail as soon as possible.

 

If you are a beneficial owner and someone else, such as your bank, broker or broker,trustee is the owner of record, the owner of record will communicate with you about how to vote your shares.

 

Whether or not you plan to attend the Annual Meeting, please vote as soon as possible. If you are a registered owner of ITT common stock and do not plan to vote in person at the Annual Meeting, you may vote via the Internet, by telephone or, if you receive a paper proxy card in the mail, by mailing the completed proxy card. Voting by any of these methods will ensure your representation at the Annual Meeting. Your vote is important.

 

 

 

Why did I receive these proxy materials?Beginning on or about March 27, 2009,29, 2011, this Proxy Statement is being providedmailed or made available, as the case may be, to shareholders who were shareholders as of the March 16, 20092011 record date, as part of the Board of Directors’ solicitation of proxies for ITT’s 20092011 Annual Meeting and any postponements or adjournments thereof. This Proxy Statement and ITT’s 20082010 Annual Report to Shareholders and Annual Report onForm 10-K (which have been furnished to shareholders eligible to vote at the 20092011 Annual Meeting) containscontain information that the Board of Directors believes offers an informed view of ITT Corporation (herein referred to as “ITT” or the Company“Company”) and meets the regulations of the Securities and Exchange Commission (the “SEC”) for proxy solicitations.

 

Who is entitled to vote?You can vote if you owned shares of the Company’s common stock as of the close of business on March 16, 20092011, the record date.

 

What items of business will I be voting on?You are voting on the following items of business, which are described on pages 7 to 15:29:

 

 

 

How do I vote?You  If you are registered owner, you can either vote in person at the Annual Meeting or by proxy whether or not you attend the Annual Meeting. If you are a beneficial owner you may vote by submitting voting instructions to your bank, broker, trustee or other nominee. If you are a beneficial owner and your shares are held in a bank or brokerage account you will need to obtain a proxy, executed in your favor, from your bank or broker to be able to vote in person at the Annual Meeting. If you are beneficial owner and your shares are held through any of the ITT savings plans for salaried or hourly employees your shares cannot be voted in person at the Annual Meeting.

 

What are the proxy voting procedures?If you vote by proxy, you can vote by following the voting procedures on the proxy card. You may vote:

 

 

Why does the Board solicit proxies from shareholders?Since it is impractical for all shareholders to attend the Annual Meeting and vote in person, the Board of Directors recommends

that you appoint the three people named on the accompanying proxy card to act as your proxies at the 20092011 Annual Meeting.

 

How do the proxies vote?The proxies vote your shares in accordance with your voting instructions. If you appoint the proxies but do not provide voting instructions, they will vote as recommended by the Board of Directors. If any other matters not described in this Proxy Statement are properly brought before the meeting for a vote, the proxies will use their discretion in deciding how to vote on those matters.

 

How many votes do I have?You have one vote for every share of ITT common stock that you own.

 

What if I change my mind?You can revoke your proxy at any time before it is exercised by mailing a new proxy card with a later date or casting a new vote by the Internet or telephone.telephone, as applicable. You can also send a written revocation to the Secretary at the address listed on the first page of the Proxy Statement. If you come to the Annual Meeting, you can ask that the proxy you submitted earlier not be used.

 

What happens if Iis a “broker non-vote”?  The New York Stock Exchange (“NYSE”) has rules that govern brokers who have record ownership of listed company stock held in brokerage accounts for their clients who beneficially own the shares. Under these rules, brokers who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on certain matters (“discretionary matters”) but do not have discretion to vote uninstructed shares as to certain other matters (“non-discretionary matters”). A broker may return mya proxy without indicating how I want my shares voted?  If you returncard on behalf of a beneficial owner from whom the proxy without specifying how you want your shares voted, you are givingbroker has not received instructions that casts a vote with regard to discretionary authoritymatters but expressly states that the broker is not voting as to non-discretionary matters. The broker’s inability to vote with respect to the proxiesnon-discretionary matters to which the broker has not received instructions from the beneficial owner is referred to as a “broker non-vote.” Under current NYSE interpretations, agenda Item 2, the ratification of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm (“Deloitte”) and agenda Item 4, the approval to amend the Company’s Restated Articles of Incorporation to allow Shareholders to call a special meeting are both considered discretionary items. Your broker does not have discretion to vote your shares held in accordance withstreet name on Items 1, 3, 5, 6 or 7, each of which is considered a non-discretionary item. Under Indiana law, the recommendationslaw of the Board

elections, and tosuch By-laws further provide in such By-laws that in uncontested elections, any Director nominee who receives less than a majority of the votes cast shall not be elected. The Company’s By-laws provide for majority voting in uncontested elections. The By-laws provide that in uncontested elections, any Director nominee who fails to be elected by a majority, but who also is a Director at the time, shall promptly provide a written resignation, as a holdover Director, to the Chair of the Nominating and Governance Committee. The Nominating and Governance Committee shall promptly consider the resignation and all relevant facts and circumstances concerning any vote, including whether the cause of the vote may be cured, and the best interests of the Company and its shareholders. The independent Directors of the Board will act on the Nominating and Governance Committee’s recommendation at its next regularly scheduled Board Meeting or within 90 days after certification of the shareholder vote, whichever is earlier, and the Board will promptly publicly disclose its decision and the reasons for its decision. This means that in an uncontested election, to be elected as a Director of ITT, each of the ten director candidates must receive a majority of votes cast to be elected as a Director of ITT.cast.

 

Under Indiana law, all otherItem 2, Item 4, Item 5 and Item 7 of the proposed agenda items require that the votes cast in favor of the proposal exceed the votes cast against the proposal. Accordingly, neither abstentions nor broker non-votesItem 6 will be determined by which of the options (i.e, every year, every two years, every three years) receives a majority of the votes cast. Item 2, Item 5, Item 6 and Item 7 are advisory in nature and are non-binding. Under current NYSE rules, Item 3 requires the affirmative vote of a majority of the votes cast on the proposal, provided that a majority of the outstanding shares of common stock are voted on the proposal. Abstentions will have anyno effect on the votes requiredoutcomes of Item 1, Item 2, Item 4, Item 5, Item 6 or Item 7. In addition, broker non-votes will have no effect on the outcomes of Item 1, Item 5, Item 6 or Item 7. With respect to Item 3, abstentions are considered “votes cast” under Indiana law.current NYSE rules and thus will have the same effect as a vote against the proposal and will be counted in determining whether a majority of the outstanding shares of common stock are voted on the proposal. Broker non-votes with respect to Item 3 will have no effect on the outcome of the proposal, assuming a majority of the outstanding shares of common stock are otherwise voted on the proposal.

 

How many shares of ITT stock are outstanding?As of the March 16, 20092011, the record date, 181,714,471183,764,908 shares of ITT common stock were outstanding.

 

How many holders of ITT outstanding shares must be present to hold the Annual Meeting?In order to conduct business at the Annual Meeting it is necessary to have a quorum. To have a quorum, shareholders entitled to cast a majority of outstanding ITT shares of common stock onvotes at the record dateAnnual Meeting must be present in person or by proxy.

 

How do I vote?You may vote “for” or “withhold” your vote with respect to any Director standing for reelection.  With respect to other agenda items,Items 1, 2, 3, 4, 5 and 7, you may vote for, against or abstain from voting. With respect to agenda Item 6, you may vote “one year,” “two years,” “three years,” or abstain from voting.

 

What is the difference between a beneficial owner and a registered owner?If shares you own are held in an ITT savings plan for salaried or hourly employees, a stock brokerage account, bank or by another holder of record, you are considered the “beneficial owner” because someone

The trustee votes the savings plan shares for which no voting instructions are received (“Undirected Shares”) in the same proportion as the shares for which the trustee receives voting instructions, except as otherwise provided in accordance with ERISA. Under the savings plans, participants are “named fiduciaries” to the extent of their authority to direct the voting of ITT shares credited to their savings plan accounts and their proportionate share of Undirected Shares. By submitting voting instructions by telephone, the Internet or by signing and returning the voting instruction card, you direct the trustee of the savings plans to vote these shares, in person or by proxy at the Annual Meeting. ITT Salaried Plansalaried or hourly plan participants should mail their confidential voting instruction card to Broadridge Financial Solutions, Inc. (“Broadridge”), acting as tabulation agent, or vote by telephone or Internet. Instructions must be received by Broadridge no later than 11:59 p.m. Eastern Time the day before the Annual Meeting.

 

I participate in the ITT savings plan for salaried employees and am a shareholder of record of shares of ITT common stock. How many proxy cards will I receive?You will receive only one proxy card. Your savings plan shares and any shares you own as the shareholder of record, including ownership through the ITT Direct Purchase, Sale and Dividend Reinvestment Plan, will be set out separately on the proxy card.

 

How many shares are held by participants in the ITT employee savings plans?As of March 16, 2009,2011, the record date, Wells Fargo Institutional Trust Services, as the trustee for the employee salaried savings plan, held 9,927,8677,957,996 shares of ITT common stock (approximately 5.46%4.3% of the outstanding shares) and The Northern Trust Company, as the trustee for the hourly employees savings plans, held 581,986507,889 shares of ITT common stock (approximately .032%0.28% of the outstanding shares).

 

Who counts the votes? Is my vote confidential?Representatives of Broadridge count the votes. Representatives of IVS Associates, Inc. will act as Inspectors of Election for the 20092011 Annual Meeting. The Inspectors of Election monitor the voting and certify whether the votes of shareholders are kept in confidence in compliance with ITT’s confidential voting policy.

 

Who pays for the proxy solicitation cost?ITT pays the cost of soliciting proxies from registered owners. ITT has appointed Georgeson & CompanyInnisfree M&A Incorporated to help with the solicitation effort. ITT will pay Georgeson & CompanyInnisfree M&A Incorporated a fee of $12,500$15,000 to assist with the solicitation and reimburse brokers, nominees, custodians and other fiduciaries for their costs in sending proxy materials to beneficial owners.

 

Who solicits proxies?Directors, officers or other regular employees of ITT may solicit proxies from shareholders in person or by telephone, facsimile transmission or other electronic communication.

 

How does a shareholder submit a proposal for the 20102012 Annual Meeting?Rule 14a-8 of the Securities Exchange Act of 1934, or the “Exchange Act,” establishes the eligibility requirements and the procedures that must be followed for a shareholder proposal to be included in a public company’s proxy materials. Under the rule, if a shareholder wants to include a proposal in ITT’s proxy materials for its next Annual Meeting, the proposal must be received by ITT at its principal executive offices on or before November 27, 200929, 2011 and comply with eligibility requirements and

 

Can a shareholder nominate Director Candidates?The Company’s By-laws permit shareholders to nominate Directors at the Annual Meeting. To make a Director nomination at the 20102012 Annual Meeting, you must submit a notice with the name of the candidate on or before November 27, 200929, 2011 to the Secretary of ITT. The nomination and notice must meet all other qualifications and requirements of the Company’s Governance Principles, By-laws and Regulation 14A of the Exchange Act. The nominee will be evaluated by the Nominating and Governance Committee of the Board using the same standards as it uses for all Director nominees. These standards are discussed in further detail below at pages 1934 to 2035 under “Information about the Board ofDirectors-Director Selection and Composition.” No one may be nominated for election as a Director after he or she has reached 72 years of age. (You can request a copy of the nomination requirements from the Secretary of ITT.)

 

 

The Board of Directors’ share ownership guidelines currently provide for share ownership levels at five times the annual retainer amount. Non-Management Directors receive a portion of their retainer in restricted stock or restricted stock units, which are paid in shares when the restricted stock units vest. Non-Management Directors are encouraged to hold such shares until his or hertheir total share ownership meets or exceeds the ownership guidelines.

 

Share ownership guidelines for corporate officers, first approved by ITT’s Board of Directors during 2001, are regularly reviewed. The guidelines specify the desired levels of Company stock ownership and encourage a set of behaviors for each officer to reach the guideline levels. The approved guidelines require share ownership expressed as a multiple of base salary for all corporate officers.

 

Specifically the guidelines apply as follows: chief executive officer at five times annual base salary; chief financial officer at three times annual base salary; senior vice presidents and group presidents at two times annual base salary; and all other corporate vice presidents at one times annual base salary. In achieving these ownership levels, shares owned outright, Company restricted stock and restricted stock units, shares held in the Company’s dividend reinvestment plan, shares owned in the ITT Salaried Investment and Savings Plan, and “phantom” shares held in a fund that tracks an index of the Company’s stock in the deferred compensation plan are considered.

 

To attain the ownership levels set forth in the guidelines it is expected that any restricted shares that become unrestricted will be held, and that all shares acquired through the exercise of stock options will be held, except, in all cases, to the extent necessary to meet tax obligations.

 

Compliance with the guidelines is monitored periodically and, as of January 31, 2009,periodically. Consistent with the guidelines, the share ownership levels have been substantially met for most Non-Management Directors and Company officers.officers as of January 31, 2011. Non-Management Directors and Company officers are afforded a reasonable period of time to meet the guidelines. The Company has taken the current world financial crisis, individual tenure, and Non-Management Directors and corporate officer share ownership levels prior to the crisis into account in determining compliance with the guidelines.

 

 

The following table shows, as of January 31, 2009,2011, the beneficial ownership of ITT common stock and options exercisable within 60 days by each Director, by each of the executive officers named in the Summary Compensation Table at page 55,72, and by all Directors and executive officers as a group. In addition, with respect to Mr. Loranger and Non-Management Directors, we have provided information about ownership of restricted stock units that provideprovides economic linkage to ITT common stock but dodoes not represent actual beneficial ownership of shares.

 

 

 

The number of shares beneficially owned by each Non-Management Director or executive officer has been determined under the rules of the SEC, which provide that beneficial ownership includes any shares as to which a person has sole or shared voting or dispositive power, and any shares which the person would have the right to acquire beneficial ownership of within 60 days through the exercise of any stock option or other right. Unless otherwise indicated, each Non-Management Director or executive officer has sole dispositive and voting power, or shares those powers with his or her spouse.

 

As of January 31, 2009,2011, all Non-Management Directors and executive officers as a group owned 0.953%0.960% of the shares deemed to be outstanding. No individual Non-Management Director or executive officer owned in excess of one percent of the shares deemed to be outstanding.

 

Set forth below is information reported to the SEC on the most recently filed Schedule 13G by the following persons who owned more than 5% of ITT outstanding common stock. This information does not include holdings by the Trusteetrustee with respect to individual participants in the ITT Salaried Investment and Savings Plan.

 

 

to serve if elected until his or her retirement, resignation or death. If unforeseen circumstances arise before the 20092011 Annual Meeting and a nominee becomes unable to serve, the Board of Directors could reduce the size of the Board or nominate another candidate for election. If the Board nominates another candidate, the proxies could use their discretion to vote for that nominee. Each Director elected at the 20092011 Annual Meeting will be elected to serve as a Director until ITT’s next Annual Meeting.

 

Director Biographical Information:Mr. Loranger, 57,59, was appointed President and Chief Executive Officer and elected a Director of ITT on June 28, 2004. He was elected Chairman of the Board of Directors on December 7, 2004. Mr. Loranger is a member of the Business Roundtable, serves on the boards of the National Air and Space Museum and the Congressional Medal of Honor Foundation and is on the Executive Committee of the Aerospace Industries Association Board of Governors. Mr. Loranger received bachelor’s and master’s degrees in science from the University of Colorado.

Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership:Mr. Loranger has extensive operational and manufacturing experience with industrial companies and, in particular, he has intimate knowledge of the Company’s business and operations having served as our Chief Executive Officer since 2004. Mr. Loranger previously served as Executive Vice President and Chief Operating Officer of Textron, Inc. from 2002 to 2004, overseeing Textron’s manufacturing businesses, including aircraft and defense, automotive, industrial products and components. From 1981 to 2002, Mr. Loranger held executive positions at Honeywell International Inc. and its predecessor company, AlliedSignal, Inc., including serving as President and Chief Executive Officer of its Engines, Systems and Services businesses. Mr. Loranger isHe also serves as a member of the Business Roundtable, servesDirector on the boards of the National Air and Space Museum and the Congressional Medal of Honor Foundation and is on the Executive Committee of the Aerospace Industries Association Board of Governors. Mr. Loranger received bachelors and masters degrees in science from the University of Colorado. Mr. Loranger is also a director of the FedEx Corporation.Corporation, providing additional relevant experience.

 

Directorships at Public Companies for the Preceding Five Years:Mr. Loranger has been a Director of ITT since 2004.2004 and has served as a Director of FedEx Corporation since 2006.

 

Director Biographical Information:Dr. Crawford, 61,63, is President and Chief Executive Officer of XCEO, Inc. From April 1, 2002 to March 31, 2003 he served as President and Chief Executive Officer of Onix Microsystems, a

Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership:Dr. Crawford is an expert on corporate governance and the author of twothree books on leadership and corporate governance. He has significant experience leading high-technology companies. From April 1, 2002 to March 31, 2003, he served as President and Chief Executive Officer of Onix Microsystems, a private photonics technology company. He was Chairman of the Board of Directors of ON Semiconductor Corporation from September 1999 until April 1, 2002. Previously, he was President and Chief Executive Officer of ZiLOG, Inc. from 1998 to 2001 and its Chairman from 1999 to 2001. Dr. Crawford has extensive executive experience with AT&T Corporation and IBM Corporation. He also serves on the Board of E.I. DuPont de Nemours and Company, providing additional relevant experience.

 

Directorships at Public Companies for the Preceding Five Years:Dr. Crawford has been a Director of ITT since 1996. He is a Director of E.I. DuPont de Nemours and Company and ON Semiconductor Corporation. Dr. Crawford was previously a Director of Agilysys, Inc. from April 2005 to June 2008.

 

Director Biographical Information:Mrs. Gold, 61, has been63, was President and Chief Executive Officer of The Western Union Company, a leading company in global money transfer, sincefrom September 2006.of 2006 to September of 2010. From May 2002 to September 2006, Mrs. Gold was President of Western Union Financial Services, Inc. and Senior Executive Vice President of Western Union’s parent company, First Data Corporation. She serves as a Director of New York Life Insurance, a mutual company. Mrs. Gold is a graduate of Carleton University, Ottawa, Canada.

Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership:As President and Chief Executive Officer of The Western Union Company, Mrs. Gold has extensive experience as the Chief Executive Officer of a public company with wide-ranging global leadership, management, and marketing experience. From October 1999 to May 2002, she was Chairman, President and Chief Executive Officer of Excel Communications, Inc. Mrs. Gold served as President and Chief Executive Officer of The Beaconsfield Group from March 1998 to October 1999. From 1997 to 1998, Mrs. Gold was Executive Vice President of Global Development of Avon Products, Inc., and from 1993 to 1997, she was President of Avon North America. Mrs. Gold is was recognized in 2003, 2006 and 2008 byFortunemagazine as one of America’s 50 Most Powerful Women in Business and byForbesmagazine on its “100 Most Powerful Women” list as No. 56 in 2007, No. 90 in 2008, and No. 76 in 2009.BusinessWeekalso a directornamed her as one of The Western Union Company and New York Life Insurance. Mrs. Gold is a graduate of Carleton University, Ottawa, Canada.the top 25 U.S. managers in 1996.

 

Directorships at Public Companies for the Preceding Five Years:Mrs. Gold has been a Director of ITT since 1997. Mrs. Gold has served as Director of The Western Union Company since 2006. Mrs. Gold has also served as a director of New York Life Insurance Company since 2001, a mutual company, and previously served as a Director of Torstar Corporation, a broad-based Canadian media company, providing additional relevant experience.

 

Director Biographical Information:Mr. Hake, 60,62, was Chairman and Chief Executive Officer of Maytag Corporation from June of 2001 to March of 2006. Previously, he wasMr. Hake is a 1971 business and economics graduate of the University of Cincinnati and holds an M.B.A. from the University of Chicago.

Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership:Mr. Hake has extensive global management and financial experience. He served as Executive Vice President and Chief Financial Officer for Fluor Corporation, an engineering and construction firm.firm from 1999 to 2001. From 1987 to 1999, Mr. Hake served in various executive capacities at Whirlpool Corporation, including Chief Financial Officer and Senior Executive Vice President for global operations. Mr. Hake also served on the Board of Directors for the National Association of Manufacturers and was Chairman of the group’s taxation and economic policy group. He is also serves as a directorDirector of Owens-Corning Corporation. Mr. HakeCorporation and is a 1971 business and economics graduatenon-executive Chairman of the University of Cincinnati and holds an M.B.A. from the University of Chicago.Smurfit-Stone Container Corporation, providing additional relevant experience.

 

Directorships at Public Companies for the Preceding Five Years:Mr. Hake has been a Director of ITT since 2002. He has served as a Director of Owens-Corning Corporation since 2006. Mr. Hake was previously a Director of Maytag Corporation from June 2001 through March 2006. He has served as non-executive Chairman of Smurfit-Stone since 2010.

 

Director Biographical Information:General Kern, 63,65, has served as a Senior Counselor to the Cohen Group since January 2005. He served as President and Chief Operating Officer of AM General LLC sincefrom August 1, 2008. He is also Senior Counselorof 2008 to The Cohen Group.January of 2010. In November 2004, General Kern retired from the United States Army as Commanding General, Army Materiel Command (AMC). General Kern graduated from the U.S. Military Academy at West Point. He holds Masters’ Degreesmasters’ degrees in both Civil and Mechanical Engineering from the University of Michigan, and he was a Senior Security Fellow at the John F. Kennedy School at Harvard University. General Kern serves on the Board of Directors of iRobot Corporation, CoVant Technologies LLC, and AT Solutions, a subsidiary of CoVant Technologies.

Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership:General Kern formerlyhas extensive international strategic business and defense-related experience. General Kern has demonstrated leadership and management experience during his37-year career with the U.S. Army. He is a leading figure on defense transformation, as well as a highly decorated combat veteran, and achieved recognized prominence as a four-star general with the Army. General Kern spearheaded Army efforts to direct supply chain improvement efforts, modernize weapons systems, and maintain field readiness, while still controlling costs. He is also a Director of the EDOiRobot Corporation, was identified asproviding additional relevant experience, and a potential Director in connection with the acquisitionmember of the EDO Corporation by the CompanyDefense Science Board and was also identified by a third-party search firm.National Academy of Engineering.

 

Directorships at Public Companies for the Preceding Five Years:General Kern has been a Director of ITT Corporation since August 2008. He has served as a Director of iRobot Corporation since 2006. General Kern was a Director of EDO Corporation from 2005 through 2007. The Company acquired EDO Corporation on December 20, 2007. He was a director of Anteon Corporation from 2005 until 2006 when it was sold to General Dynamics.

 

Director Biographical Information:Mr. MacInnis, 62, has been64, is currently Chairman of the Board and was Chief Executive Officer of EMCOR Group, Inc. sincefrom April 1994.of 1994 to January of 2011. He was also President of EMCOR from April 1994 to April 1997. Mr. MacInnis is also a Director of The Williams Companies, Inc., The Greater New York Chapter of the March of Dimes, and ComNet Communications, LLC.LLC and The Williams Companies, Inc. Mr. MacInnis received an undergraduate degree from The University of Alberta and is a graduate of The University of Alberta Law School, Alberta, Canada.

 

Directorships at Public Companies for the Preceding Five Years:Mr. MacInnis has been a Director of ITT since 2001. Mr. MacInnis has been Chairman of the Board and a Director of EMCOR Group, Inc. since 1994 and a Director of The Williams Companies, Inc. since 1998.

Engineers. She is on the Board of Trustees of St. John’s University, and Rensselaer Polytechnic Institute and the State University of New York, serves on the Board of Directors of Partnership for New York City and is a member of the Board of Directors for the Business Council of New York State, Inc. Ms. Sanford is a graduate of St. John’s University and earned an M.S. degree in operations research from Rensselaer Polytechnic Institute.

 

Directorships at Public Companies for the Preceding Five Years:Ms. Sanford has been a Director of ITT since 1998.

 

Director Biographical Information:Mr. Tambakeras, 58,60, served as Chairman of the Board of Directors, Kennametal, Inc. from July 1, 2002 until December 31, 2006. He was also President and Chief Executive Officer of Kennametal from July 1999 through December 31, 2005. From 1997 to June 1999, Mr. Tambakeras served as President, Industrial Controls Business, for Honeywell Incorporated. Mr. Tambakeras also serves on the Board of Parker Hannifin Corporation and the Newport Group. He is a trustee of Arizona State University.University and has served for two years on the President’s Council on Manufacturing. Mr. Tambakeras received a B.Sc. degree from the University of Witwatersrand, Johannesburg, South Africa and an M.B.A. from Loyola Marymount University, Los Angeles, CA.

 

Directorships at Public Companies for the Preceding Five Years:Mr. Tambakeras has been a Director of ITT since 2001. Previously, Mr. Tambakeras was a Director of Kennametal, Inc. from July 1999 through December 2006. Mr. Tambakeras has served on the Board of Parker Hannifin Corporation since 2005 and served as a Director of the Board of Newport Corporation from May 2008 through December 31, 2009.

 

 

The Audit Committee also reviewed the terms and conditions of Deloitte’s engagement letter including an agreement by the Company to submit disputes between Deloitte and the Company to a dispute resolution process and to limit awards based on punitive or exemplary damages under the dispute resolution procedures.

 

The Audit Committee discussed these considerations as well as Deloitte’s fees and services with Deloitte and Company management. The Audit Committee also determined that any non-audit services (services other than servicesthose described in the annual audit services engagement)engagement letter) provided by Deloitte were permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, and rules promulgated by the PCAOB in Rule 3526T.3526. Representatives of Deloitte will be present at the 20092011 Annual Meeting to answer questions. Representatives of Deloitte also will have the opportunity to make a statement if they desire to do so.

 

Aggregate fees billed to the Company for the fiscal years ended December 31, 20082010 and 20072009 represent fees billed by the member firms of Deloitte Touche Tohmatsu, and their respective affiliates.

 

 

The Audit Committee has approved specific categories of audit, audit-related and tax services incremental to the normal auditing function, which Deloitte may provide without further Audit Committee pre-approval. These categories include among others, the following:

 

 

Several shareholders have advised the Company that they intend to present the following resolution at the Annual Meeting. In accordance with applicable proxy regulations, the proposed resolution and supporting statement, for which the Board of Directors and the Company accept no responsibility, are set forth below. Approval of this proposal would require the affirmative vote of a majority of the outstanding sharesvotes cast of ITT stock present in person or by proxy and entitled to vote at the Annual Meeting. Identical shareholder proposals were received from each of the following Mercy Investment Program and the Dominican Sisters of Hope, Corporate Social Responsibility, each located at 205 Avenue C, Apt. 10E New York, NY 10009;Services, Inc., 2039 North Geyer Road St. Louis, MO63131-3332; the Presbyterian Church (USA), 100 Witherspoon Street Louisville, KY40202-1396; and theThe Domestic and Foreign Missionary Society of the Protestant Episcopal Church in the United States of America, 815 Second Avenue New York, NY10017-4503 (collectively, the “Proponents”), which shareholders hold 100, 1,800,56, 54, and 11,5008,100 shares respectively.

As companies formulate comprehensive policies, we believe significant commercial advantages may accrue through enhanced corporate reputation, improved employee recruitment and one for making misleading statements to the State Department’s Directorateretention, improved community and stakeholder relations and reduced risk of Defense Trade Controls (DDTC).adverse publicity, consumer boycotts, divestment campaigns and lawsuits.

 

RESOLVED:Resolved  Shareholders, shareholders request that the Board of Directors provide,to amend, where applicable, within sixten months of the 2009 annual meeting, a comprehensive report, at reasonable cost2011 Annual Meeting, ITT’s policies related to human rights that guide its international and omitting proprietaryU.S. operations to conform more fully with international human rights and classified information, of ITT Industries’ foreign sales of military and weapons-related products and services.humanitarian standards.

 

 

We believe withITT’s current human rights policies are limited in scope, and provide little or no guidance for determining business relationships where our products or services could entangle the American Red Cross thatcompany in human rights violations. Although we do not recommend inclusion of any specific provision of the “greaterabove-named documents in the availability of arms, the greater the violationsrevised policy, we believe ITT’s policies should reflect a more comprehensive understanding of human rights and international humanitarian law.”rights.

 

Global securityITT should be able to assure shareholders that employees are treated fairly and with dignity wherever they work in the global economy. Going beyond internal practices, however, ITT should also provide similar assurance that its products and services are not used in human rights violations. One element of ensuring compliance is securityutilization of all people. Weapons sold to one country atindependent monitors composed of respected local human rights, religious and non-governmental organizations that know local culture and conditions. We believe the adoption of a certain time subsequently can become a threat to our own security, as we have seen several times in our recent history. We also believe that this reportmore comprehensive human rights policy, coupled with implementation, enforcement and independent monitoring, will assistassure shareholders in assessing the effectiveness of newly instituted company procedures to prevent further violations of ITAR. Therefore, we believe it is reasonable that the report include:

 

The proposal requests that, the Company provide, within sixten months of the 20092011 annual meeting a comprehensive report, at reasonable cost and omitting proprietary and classified information, of the foreign sales of military and weapons-related products and services byshareholders, the Company (identified byrevise its former name). The Company believespolicies related to human rights that producingguide its international and U.S. operations in order to have them conform more fully with international human rights and humanitarian standards.

ITT has long supported human rights through its business practices and directly through a specific provision in its Code of Conduct. ITT has also included such rights in its ITT Management System (“IMS”) which incorporates ITT’s values. Over the report requested bypast several years, ITT has continued to demonstrate progress in benchmarking and communicating its commitment to human rights. This commitment was further evidenced this year with the Proposal is unnecessary because sufficient information is publicly available. The Company’s foreign military sales are a matteradoption of public record through U.S. government-provided information or the news media. The Department of Defense (foreign military sales) and Department of State (directthis Policy on Human Rights.

This Vision and Values are fundamental to our culture and they are codified in ITT’s Code of such sales to Congress and the media. Furthermore, pursuant to 15 C.F.R. Part 701, Offsets in Military Exports, under the Defense Production Act of 1950, as amended, the Company already provides offset agreement data to the Department of Commerce Bureau of Industry and Security data for itsOffsets in Defense Trade Report(see, for example, the January 2007, 11th edition),Conduct which is publicly available and required pursuant to Section 309 of the Defense Production Act of 1950 (50 U.S.C. § 2099). Sources of publicly available information on the Company’s military sales includeweb site athttp://www.itt.com/citizenship/governance/code-conduct/. To ensure awareness of ITT’s leadership commitments, the websiteCompany conducts training for its employees. This training reinforces the responsibility of the Defense Security Cooperation Agency at www.dsca.mil, which lists public noticesall employees to Congress of proposed major foreign military sales under Section 36(b) of the Arms Export Control Act, as amended (which are also published in the Federal Register), as well as announcements of foreign military sales contracts,act ethically and the website of the Federation of American Scientists at www.fas.org, which also provides information on such public notices and other information regarding foreign military sales and direct commercial sales.report possible violations.

 

In addition, the Company’s Annual Reports2009, ITT modified its Code of Conduct to Shareholders,add specific language regarding its periodic reports onForms 10-K and10-Q, and its corporate website www.itt.com provide extensive information concerning the Company’s military products and services. The Company’s2007-2008 Corporate Responsibility Report available throughhttp://www.itt.com/responsibility/ contains detailed information on pages 4 and 5 about the Company’s global presence with employees working in more than 55 countries and “The Company’s Revenue Profile” on page 4 indicates that the defensecommitment to Human Rights:

Then, in 2010, ITT conducted further researched and benchmarked corporate best practices on Human Rights. Based on the Company’s fiscal 2007 revenue. Part Iresults from that external benchmarking effort, and with a desire to continuously improve ITT’s ethical culture, in 2011, ITT implemented a specific Policy on Human Rights. The policy, which operates in conjunction with ITT’s Vision and Values and Code of the Company’s Annual ReportConduct, applies to all ITT employees worldwide and to ITT’s global supply chain partners within ITT’s sphere of influence.

ITT’s newly implemented Policy onForm 10-K for the fiscal year ended December 31, 2008 filed with the Commission on February 25, 2009 (the “2008Form 10-K”) describes in detail the Company’s Defense Electronics & Services segment Human Rights states that ITT fully supports and its sales and revenues statistics on pages 2 and 3. The defense business represented 54% of the Company 2008 sales and revenue. Note 21adheres to the Company’s consolidated financial statements on pages77-78principles of both the 2008Form 10-K breaks down sales to Western Europe, Asia PacificUniversal Declaration of Human Rights and the United States.Nations Global Compact where we operate. Furthermore, the policy states that ITT will work to identify and do business with supply chain partners who aspire to conduct their business in a similar manner. To underscore this commitment, the Company has published the full policy on its web site athttp://www.itt.com/citizenship/employees/.

 

The Company also provides extensive information regardingFor the ITT Defense Electronics & Services business segment on a separate standalone website www.defense.itt.com. The website dividesforegoing reasons, the Defense Electronics & Services segments into quadrants: “Communications,” “Sensing & Surveillance,” “Space” and “Advanced Engineering Services.” The quadrants have been further divided into various sub-categories covering the entire spectrumBoard of the Defense Electronics & Services products and services. Each sub-category within a quadrant contains detailed information on the specific products sold and services offered in the sub-category. The Company believes this disclosure provides the Company’s shareholders with more than adequate information concerning the Company’s processes, procedures, criteria and statistics regarding foreign sales of military and weapons-related products and services.

 

 

 

Responsibilities of the Board of Directors.  The Board of Directors sets policy for ITT and advises and counsels the chief executive officer and the executive officers who manage the Company’s business and affairs. The Board of Directors is responsible for assuring that:

 

 

Governance Principles.  The Board of Directors has adopted principles for governance of the Board (the “Corporate Governance Principles”) and charters for each of its standing committees. The Corporate Governance Principles provide, among other things, that an Independent Presiding Director shall be appointed on an annual basis (but no Non-Management Director shall serve more than three consecutive annual terms) to preside at meetings of the Board of Directors at which the Chairman is not present, including regularly scheduled private sessions of the Non-Management Directors.

 

The Independent Presiding Director, whose position is described more fully at Section 7c of the Board’s Corporate Governance Principles,http://www.itt.com/responsibility/governance/principles/,is also available to address issues or concerns raised by other Non-Management Directors, senior executives or major shareholders; communicate any issues or concerns to the full Board and the Chairman, President and Chief Executive Officer; assist the Chairman, President and Chief Executive Officer in developing appropriate schedules and agendas for Board and Committee meetings, and act on behalf of the Chairman, President and Chief Executive Officer and the Board as a formal coordinating point for facilitating, canvassing, reconciling and communicating board issues, concerns and recommendations. The Board of Directors has selected Frank T. MacInnis as its Independent Presiding Director, to serve a one-year term, expiring in May 2009.

 

Communication with the Board of Directors.  Interested parties may contact the Independent Presiding Director, all outside Directors as a group, the entire Board of Directors, a committee of the Board of Directors or an individual Director by submitting a letter to the desired recipient in a sealed envelope labeled “Independent Presiding Director,” “Outside

Financial Officer and Principal Accounting Officer, or persons performing similar functions, by posting such information on our website as set forth above rather than by filing aForm 8-K. A copy of the Code of Corporate Conduct will be provided, free of charge, to any shareholder upon request to the Secretary of ITT.ITT Corporation.

 

Independent Directors.  The Company’s By-laws require that a majority of the Directors must be independent directors. Additionally, the Company’s Non-Management Directors must meet the New York Stock Exchange (“NYSE”)NYSE independence standards and the Company’s Corporate Governance Principles independence standards. The Company’s Corporate Governance Principles define independence. The Charters of the Audit, Compensation and Personnel, Nominating and Governance, and Strategy and Finance Committees as well as the resolution establishing the Special Litigation Committee also require all members to be independent directors.

 

Based on its review, the Board of Directors affirmatively determined, after considering all relevant facts and circumstances, that no Non-Management Director has a material relationship with the Company and that all Non-Management Directors, including all members of the Audit, Compensation and Personnel, Corporate Responsibility, Nominating and Governance and Strategy and Finance Committees, meet the independence standards of the Company’s Corporate Governance Principles and By-laws as well as the independence definition in the current NYSE corporate governance rules for listed companies.

 

NYSE Independence Requirements:

 

(a) A Director qualifies as “independent” when the board of directors affirmatively determines that the director has no material relationship with the company, or any subsidiary in a consolidated group (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). Companies must identify which directors are independent and disclose the basis for that determination.

 

 

 

In addition to the NYSE standards, and the independence standards in the Company’s By-laws, the Board has adopted the following categoricaladditional standards for independence described below, which are included in the Board’s Corporate Governance Principles.

 

Under the Corporate Governance Principles, an independent director is someone who is free of any relationship that would interfere with the exercise of independent judgment, and within the past 5 years:

 

 

Each year, the Company’s Directors and executive officers complete annual questionnaires designed to elicit information about potential related person transactions. Additionally, Directors and executive officers must promptly advise the Corporate Secretary if there are any changes to the information previously provided.

 

The Nominating and Governance Committee reviews and considers all relevant facts and circumstances with respect to independence for each Director standing for election prior to recommending selection as part of the slate of Directors presented to the shareholders for election at the Company’s Annual Meeting. The Nominating and Governance Committee reviews its recommendations with the full Board, which separately considers and evaluates the independence of Directors standing for re-election using the categoricaladditional standards described above.

 

In February 2009,2011, the Board considered regular commercial sales and payments in the ordinary course of business as well as charitable contributions with respect to each of the Non-Management Directors standing for re-election at the Company’s 20092011 Annual Meeting. In particular, the Board evaluated the amount of sales to ITT or purchases by ITT with respect to companies where any of

 

Mr. Loranger is not independent because of his position as Chairman, President and Chief Executive Officer of the Company.

 

The following are the independent directors standing for election: Drs. Crawford, Hamre, and Mohapatra;Mohapatra; General Kern; Messrs. Hake, MacInnis, and Tambakeras,Tambakeras; Mrs. Gold and Ms. Sanford.

 

Compensation Committee Interlocks and Insider ParticipationParticipation.:  None of the members of the Compensation and Personnel Committee during fiscal 2008year 2010 or as of the date of this proxy statement has been an officer or employee of the Company and no executive officer of the Company served on the compensation committeeCompensation Committee or board of any company that employed any member of the Company’s Compensation and Personnel Committee or Board of Directors.

 

Director Selection and CompositionComposition.:  Directors of the Company must be persons of integrity, with significant accomplishments and recognized business stature. The Nominating and Governance Committee desires that the Board of Directors be diverse in terms of its viewpoints, professional experience, education and skills as well as race, gender and national origin. In addition, ITT’s corporate governance principles state that as part of the membership criteria for new Board members, individuals must possess such attributes and experiences as are necessary to provide a broad range of personal characteristics including diversity, management skills, and technological, business and international experience. On an annual basis, as part of its self-evaluation, the Board of Directors assesses whether the mix of directors is appropriate for the Company. In addition, the Nominating and Governance Committee assesses the effectiveness of these criteria by referring to the criteria when it periodically assesses the composition of the Board. The Board of Directors actively seeks to consider diverse candidates for membership on the Board when it has a vacancy to fill and includes diversity as a specific factor when conducting any search. As part of its process in identifying new candidates to join the Board of the Directors, the Nominating and Governance Committee considers whether and to what extent the candidate’s attributes and experiences will individually and collectively complement the existing Board, recognizing that ITT’s businesses and operations are diverse and global in nature. Currently, the Board consists of ten directors. Out of the ten directors, two are female, one is African American and one is from India. The directors come from diverse professional backgrounds, including technology, financial and manufacturing industries as well as governmental and non-governmental agencies.

To be considered by the Nominating and Governance Committee as a Director candidate, a nominee must meet the requirements of the Company’s By-laws and Corporate Governance Principles. A nominee should also have experience as a board member, chief executive officer or senior officer of a publicly traded or large privately held company, or have achieved recognized prominence in a relevant field as, for example, a distinguished faculty member of a highly regarded

educational institution or senior governmental official. In addition to these minimum qualifications, the Nominating and Governance Committee evaluates each nominee’s skills to determine if those skills are complementary to the skills demonstrated by current Board members. The Nominating and Governance Committee also evaluates the Board’s needs for operational, technical, management, financial, international or other expertise.

 

Prior to recommending nominees for election as Directors, the Company’s Nominating and Governance Committee engages in a deliberative, evaluative process to assureensure each nominee possesses the skills and attributes that individually and collectively will contribute to an effective Board of Directors. Biographical information for each candidate for election as a Director is evaluated and candidates for election participate in interviews with existing Board members and management, and aremanagement. Each candidate is subject to thorough background checks. Director nominees must be willing to commit the requisite time for preparation and attendance at regularly scheduled Board and Committee meetings and participation in other matters necessary for good corporate governance.

 

The Nominating and Governance Committee identifies Director candidates through a variety of sources including personal references and business contacts. On occasion, the Nominating and Governance Committee utilizes a search firm to identify and screen Director candidates and pays a fee to that firm for each such candidate elected to the Board of the Company. In 2008, the Nominating and Governance Committee considered the candidacy of General Paul J. Kern. General Kern was identified as a former director of the EDO Corporation, which was acquired by the Company, as well as by a third-party search firm. The Nominating and Governance Committee will consider shareholderdirector nominees recommended by shareholders for election to the Company’s Board who meet the qualification standards described above. (See Section II.5II.E. of the Nominating and Governance Charter athttp://www.itt.com/responsibility/governance/nominating/..) The Nominating and Governance Committee also evaluates and makes recommendations to the Board of Directors concerning appointment of Directors to Board Committees, selection of Board Committee Chairs, Committee member qualifications, Committee member appointment and removal, Committee structure and

 

The Board of Directors has determined that each member of the Audit Committee meets the independence standards set out in the Board’s Corporate Governance Principles and its Audit Committee Charter and the requirements of the New York Stock ExchangeNYSE currently in effect andRule 10A-3 of the

Exchange Act. The Board of Directors has evaluated the performance of the Audit Committee consistent with the regulatory requirements.