• Conflicts of Interest

  • It is the policy of Pepco Holdings, Inc., and its affiliates (collectively, "PHI" or the "Company") that:

    (a) all persons working at or on behalf of the Company avoid conflicts between their private interests and the interests of the Company;
    (b) any actual conflicts be resolved before they damage or interfere with the Company's interests, and;
    (c) any actual or potential conflicts be disclosed to the Company on a timely basis.

    It is also the policy that employees and others working at or on behalf of the Company avoid even the appearance of conflicts of interest because they can undermine trust among employees and others working at or on behalf of the Company and have a negative effect on the Company's reputation.

    What is a "conflict of interest"? 

    It is a conflict between the private interests and the official responsibilities of an employee or other person working at or on behalf of the Company. Each of us has many interests apart from our work at the Company. A "conflict of interest" exists anytime we face a choice between what is in our own personal interest (financial or otherwise) and what is in the best interests of the Company. Such conflicts can also include activities or associations that might compromise, or appear to compromise, the exercise of sound, impartial judgment in determining what is in the best interests of the Company, its shareholders, our customers or our fellow employees and others who work at or on behalf of the Company. The interests involved here may be direct (the employee or other person working at or on behalf of the Company) or indirect (a relative, friend, business associate, or an entity in which one of those individuals has an independent interest).

    Importance of the facts of each situation: 

    The facts of each situation will determine whether the personal interest in question could be in conflict with the Company's interests. Here are some examples of situations that could involve a conflict and should be avoided:

    • Ownership by an employee or other person working at the Company, or a family member or relative, of a significant financial interest in any outside enterprise which does or seeks to do business with, or is a competitor of, the Company.
    • Serving as a director, officer, partner, consultant or in any key role in any outside enterprise that does or seeks to do business with, or is a competitor of, the Company; provided, however, that an interested director transaction approved by disinterested directors in accordance with Section 144 of the Delaware General Corporation Law shall not be considered a conflict of interest under this policy.
    • Acting as a broker, agent or other intermediary for the benefit of a third party in transactions involving the Company.
    • Participating in making any decision on behalf of the Company in which a person working at or on behalf of the Company has a personal interest ("participating" includes making recommendations or otherwise seeking to influence a decision to be made by another person).
    • Any business, financial or professional services relationship with any local, state or federal government employee or official, particularly where the government employee or official has a position that could in any way impact the operations, business of best interests of the Company.
    • Any other arrangement or circumstance, including family or other personal relationships, which might dissuade the person working at or on behalf of the Company from acting in the best interests of the Company. Refer to the Procedure for Evaluating Related Person Transactions.

    An appearance of a conflict of interest may take many forms and requires a review of all relevant facts and circumstances. You can have an appearance of a conflict of interest without an actual conflict of interest. It may arise if a reasonable person outside of PHI could look at a relationship between a PHI employee and a vendor, governmental official or other person connected to the Company or any of its subsidiaries and question whether that employee is using his or her relationship to exert undue or improper influence on the third party. An appearance of a conflict of interest might also arise if a reasonable person outside of PHI could look at such a relationship and question wither the vendor, governmental official or other person connected to the Company is using his or her relationship to exert undue or improper influence on the PHI employee.

    Here are some examples of situation that could be viewed by an outside party as an appearance of a conflict of interest.

    • An employee has been invited on a day cruise by a member of a state public service commission that regulates PHI. The government official has been a friend of the employee for a long time.
    • An employee hires a law firm to provide him or her individual legal advice. The law firm has as a partner an elected or appointed official with jurisdiction over PHI.
    • An employee has a personal friend who also is a vendor to PHI, but he or she does not personally do business with the vendor in his or her capacity as a PHI employee. That friend invites the employee to a three-day conference in Las Vegas and offers to pay for all of the employee’s costs associated with attending the event.

    It is imperative that PHI employees promptly contact their supervisors or the Ethics Officer in accordance with PHI’s Corporate Business Policies if there is any question as to whether a particular relationship, business or financial transaction, personal services contract or other matter could appear to be a conflict of interest and compromise the Company’s best interests.

    Outside employment

    This may be a conflict of interest if it places an employee or other person working at or on behalf of the Company in the position of appearing to be representing the Company in that employment, or if it provides goods or services substantially similar to those the Company provides or is considering providing. A conflict would also exist if the outside employment lessens the efficiency, alertness, productivity or availability normally expected of an employee or other person working at or on behalf of the Company.

    Protecting yourself 

    Conflicts of interest are not always obvious. There are many areas of uncertainty, as well as actual conflicts, that arise despite the best intentions of an employee or other person working at or on behalf of the Company. It is important, therefore, that every employee and other person working at or on behalf of the Company promptly disclose to his or her supervisor any facts or circumstances that could present a conflict of interest. You should also contact the Ethics Officer for assistance in thinking through whether a particular situation presents either a potential or actual conflict.