Thank you very much Dr. Harned. I am proud to be here tonight representing United Technologies Corporation and our Chairman & CEO, Louis Chênevert.

And I am delighted to be addressing you, the ERC Fellows, about a topic that is important to me and I am sure to all of you as well, since your research was very much a part of our continuous improvement in driving ethical behavior. I would also like to acknowledge UTC’s Vice President of Business Practices, Mike Monts, who has been a true leader for change at UTC.

UTC received the Pace Award this year for three reasons: (1) careful assessment of improvement opportunities, (2) rigorous implementation of changes, and (3) metrics that have affirmed progress.

Tonight I would like to discuss briefly our approach to ethics at Otis and UTC. I will explain our ethics and compliance program and some of the changes we made to ensure that we do everything we can to create an ethical business environment. I will also explain some of the challenges we face and the actions we continue to take to address those challenges. I will end my presentation by taking any questions you might have for me.

First, let me give to you a few brief points about my background and Otis Elevator Company.

I became President of Otis in May 2008. My timing was perfect – just a few short months after taking this job, Lehman Brothers collapsed and the world economies all fell into a recession. Before becoming worldwide president of Otis, I was the president of our operations in the United Kingdom and Central Europe, based in London. I have worked for Otis for my entire professional career – almost 30 years.

Otis is one of six UTC companies. We are committed to excellence, and this commitment goes back to our founding in 1853. We are the largest elevator company in the world. Our global market share is about 25 percent. Our sales in 2009 were almost $12 billion, 80 percent of which originated outside the U.S., and we delivered $2.4 billion of profit. Despite the economic downturn in the last few years, Otis continues to deliver incremental profit for our parent company UTC and our shareholders.

As with many of your companies, Otis is a truly global company. We do business in about 200 countries and territories with a de-centralized management structure. We have more than 60,000 employees, and 85 percent of them work outside the U.S. Because of our global nature, we face some unique challenges when it comes to ethics and compliance: many different languages, cultures, and legal systems. To meet these challenges, we developed strong systems, a strong culture, and a very strong management team.

Let me now briefly explain our ethics and compliance system.

Prior to 2004, Otis used UTC’s then-existing ethics program. This program was based on the belief that the right rules – when coupled with the right training – would largely assure the right kinds of actions. We also believed that audits – conducted by outside lawyers and accounting firms – would fill any gap by deterring and detecting misconduct.

But following several significant compliance escapes, we launched a comprehensive effort to reinvigorate our ethics and compliance program. As I mentioned before, UTC and its business units acted upon the research findings of the ERC, including the findings in the National Business Ethics Survey, about what drives ethical behavior in businesses.

First, we dramatically increased our communications on ethics. Ethics became one of our “Three Absolutes” at Otis – together with safety and internal controls. Our three absolutes became a very visible part of our overall business culture. Every business meeting and employee event includes a discussion of the three absolutes.

For example, in the last two years I have personally attended over 30 executive committee meetings and operating reviews all over the Otis world – in Russia, Turkey, China, Japan, Washington, D.C., Philadelphia, Spain, France, and India, just to name a few. I also delivered close to 50 speeches and addresses to our employees. And at every single one, I discuss the importance of ethics. I also insist that each of my business leaders actively discuss with their employees the importance of ethics.

Next, we put together a compliance process that can be visualized as a circle. The process starts with a careful risk assessment conducted locally in each of our operations around the world. After identifying compliance or ethical risks, we put in place risk mitigation plans to address each of these risks.

We then audit our operations where we have identified significant risks. These audits are performed by cross-functional teams consisting of professional investigators, attorneys, finance professionals, and business professionals familiar with the type of issues being audited. Based on the audit findings, we take any necessary disciplinary actions and we develop and implement additional controls as needed. We then start the process all over again with a new risk assessment.

One thing we learned over the last several years is that compliance needs to be a consistent focus for all of management. Also, we continually need to modify our approach – always learning about new risks and revising our approach to mitigate those risks.

For example, when I became Otis president in 2008, we expanded the cross-functional audits by creating local cross-functional audit teams in each of our six geographic areas. In this way, local management has taken on more ownership of compliance and ethics – they are more involved in identifying and evaluating the risks in their local countries and implementing mitigation plans.

Finally, Otis adopted all components of UTC’s ethics programs, including “ethics objectives” that flow down from our CEO, Mr. Louis Chênevert, and an ethics competency to measure individual ethical performance.

All of our key employees are required to include ethics objectives in their annual performance plan. These objectives require our leaders to actively communicate with other employees regarding the importance of ethics, and to ensure that all members of their organizations receive appropriate ethics training. The ethics competency, which is based in large part on the ERC findings, requires the supervisor to rate the degree to which the employee has demonstrated the desired ethical behaviors.

We are proud of our performance culture at Otis and UTC. Now, in addition to the other performance targets we expect from our business leaders, we require that they set and meet ethics targets and demonstrate ethical performance as well.

So, what progress did we achieve after making these various enhancements? The results from our biennial employee survey are encouraging. For example:

• The composite ethics score for UTC improved by 15 percentage points in only four years;
• Scores for every question improved;
• Every UTC company improved;
• Every region of the world improved;
• And at Otis, our overall score improved 18 percentage points.

UTC and Otis achieved this great success because of the hard work and dedication of many people in our organizations around the world. One group in particular that provides tremendous support to us is the UTC Business Practices Organization under the leadership of Mike Monts.

We are fortunate to have such a strong organization dedicated to helping our businesses better understand our ethics culture and requirement, and to meet those requirements. Mike built a strong team and organization in our corporate headquarters, but they know that they need to be close to our businesses to understand the challenges we face and help us overcome them. Mike travels the globe assisting all of the UTC companies in this effort. In fact, during one of my trips to Asia in 2009, Mike was in Singapore meeting all of the UTC business practices officers based in Asia, helping develop and train them. Mike, thank you for all of your support. We are also fortunate to have the support of the Ethics Resource Center. In our ethics journey, we certainly have taken advantage of your research findings.

Ethics is part of our culture at Otis, but we must work hard every day to make sure all of our employees understand this. Every employee must understand that with ethics, 100 percent compliance, 100 percent of the time is essential.

I visit many employees around the world and I know that in some countries behaving ethically can be a challenge. Some countries – I think of China, or Russia, or Brazil – do not have a well developed business ethics culture. Because of this, people may think the rules are a little different in these countries at UTC.

My answer is always the same: At Otis, and at UTC, we act ethically and we follow the rules wherever we are in the world.

Let me share with you a short story of my visit to Brazil last year. I visited Brazil in January 2010 and one employee tried to explain to me that ethics were “different” in Brazil. You may know that in Brazil they love their football – sorry, we call it soccer here in the U.S. So I asked the Otis team in Brazil if they know what a red card is. Of course they did – in Brazil, a player receives a red card if he breaks a rule on the soccer field. And they explained to me that in Brazil, if a player gets a red card, he is out of the game. I then explained to them that, interestingly enough, a red card means the same thing in France, and in the UK, and in the U.S, and in China, etc., etc.

It is the same with ethics. The rules are the same for all of us – no matter which country we work in. In order for any business to be successful, it must have a strong business ethics culture and a commitment to the highest ethical standard. This is true not only in the U.S. and Western Europe, but in emerging and developing countries as well.

In the past, we thought that our ethics program was robust, yet we had a major compliance lapse. As a result, we re-evaluated our program from top to bottom. We studied the research from the Ethics Resource Center. We used this research as we made many improvements in many areas including training, reporting mechanisms, risk management systems, investigations, and monitoring. We also re-committed ourselves to the importance of ethics in everything we do. We built a strong foundation for the future, a future that is based on continuous learning and continuous improvement.

On behalf of UTC, thank you again for this award. More importantly, thank you for all the great work you do to promote an ethical business culture.