Creation of new Subsidiary Governance Oversight Committee (“SGOC”) (Legal, Tax, Accounting, Treasury) to:

Administer, review and update Guidelines periodically
Provide multi-disciplinary input on subsidiary lifecycle questions (e.g., restructuring, new entity formation, liquidation)

Make recommendations to General Counsel on exception requests

Guidelines have a new “ask” of Finance Managers:
Approval of annual financial statements by CFSC Controller and VP of Region; and
Annual submission of Subsidiary Governance Calendar and Updates

PURPOSE: The corporate governance guidelines (the “Corporate Governance Guidelines”) are designed to assist Caterpillar Financial Services Corporation (“Cat Financial”) and its subsidiaries (individually a “Subsidiary” and collectively, the “Subsidiaries”) worldwide: (i) maintain compliance with all applicable legal and regulatory requirements; (ii) mitigate litigation risk and unintended tax exposure; (iii) aid in the accuracy of corporate reporting and record-keeping; (iv) effectively manage subsidiary life-cycles; and (v) maintain corporate governance standards in accordance with multinational corporation best practices while also maintaining flexible consistency.

OVERSIGHT: The administration of the Cat Financial Corporate Governance Guidelines is carried out by the Subsidiary Governance and Oversight Committee (the “SGOC”). The SGOC shall be comprised of the Cat Financial Securities Attorney, the Cat Financial Corporate Governance Paralegal, the Cat Financial Controller, the Cat Financial Tax Director and the Cat Financial Treasurer or their respective designees.

DUTIES: The SGOC shall be responsible for (i) regularly reviewing and updating, if necessary, the Corporate Governance Guidelines; (ii) reviewing the formation of new Subsidiaries; and (iii) addressing any matters related to Subsidiary life-cycle management such as the dissolution, liquidation, restructuring or consolidation of Subsidiaries.

i. Annual Meeting: The SGOC shall meet in-person at least once annually to (i) revise the Corporate Governance Guidelines; (ii) review Subsidiary life-cycle management issues; and (iii) make recommendations to the Cat Financial Compliance Group. The annual meeting shall be called by the Corporate Governance Paralegal.

ii. Ad-Hoc Meetings: The SGOC may provide consultation and advice on ad-hoc issues as they arise throughout the year via email or through in-person meetings.

b. Submitting matters to SGOC: Matters requesting the opinion of the SGOC shall be submitted to both the Securities Attorney and the Corporate Governance Paralegal in Nashville for presentation to the SGOC via email at Corporate.Paralegal@cat.com.

Forming a new Subsidiary can result in increased administrative expense as well as enhanced legal and regulatory risk. Therefore, no new Subsidiary shall be formed without prior consultation with the SGOC, notwithstanding any approval obtained from other internal sources, including, but not limited to, local leadership, the Cat Financial Strategic Growth Council and/or any 6 Sigma team. Additionally, the decision to dissolve or liquidate an entity shall be reviewed by the SGOC, notwithstanding any decisions from other internal sources.

Forming a new Subsidiary can result in increased administrative expense as well as enhanced legal and regulatory risk. Therefore, no new Subsidiary shall be formed without prior consultation with the SGOC, notwithstanding any approval obtained from other internal sources, including, but not limited to, local leadership, the Cat Financial Strategic Growth Council and/or any 6 Sigma team. Additionally, the decision to dissolve or liquidate an entity shall be reviewed by the SGOC, notwithstanding any decisions from other internal sources.

Forming a new Subsidiary can result in increased administrative expense as well as enhanced legal and regulatory risk. Therefore, no new Subsidiary shall be formed without prior consultation with the SGOC, notwithstanding any approval obtained from other internal sources, including, but not limited to, local leadership, the Cat Financial Strategic Growth Council and/or any 6 Sigma team. Additionally, the decision to dissolve or liquidate an entity shall be reviewed by the SGOC, notwithstanding any decisions from other internal sources.

Unless local laws require otherwise, Cat Financial officers shall consist of:
i. the Cat Financial Business Excellence Council, excluding the president of Caterpillar Insurance entities;
ii. the Cat Financial Controller;
iii. the Cat Financial Treasurer
iv. the Chief Tax Officer of Caterpillar Inc. (appointed as an Assistant Treasurer); and
v. such other officers as the Cat Financial General Counsel shall deem appropriate, including but not limited to the positions of Assistant Secretary.


Unless local laws require otherwise, Cat Financial Subsidiaries shall appoint the following individuals as officers:
i. Managing Director, Country Manager or Business Unit Manager as President;
ii. Finance Manager as Vice President & Chief Financial Officer;
iii. Local Attorney in office or region as Secretary;
iv. Vice President for the region or business unit as Vice President (at their discretion); and
v. the Chief Tax Officer of Caterpillar Inc. (appointed as an Assistant Treasurer)

Conflicts of Interest: A conflict of interest occurs when an officer has a professional or personal interest that may not allow them to represent the best interest of the company. Officers must not allow their personal interests to adversely influence their judgment, objectivity or loyalty to Cat Financial (or any affiliate) in conducting Cat Financial business activities and assignments. Every officer must disclose any conflicts of interest whether actual or perceived prior to their appointment. During their appointment, if any actual or perceived conflicts of interest arise, these must be discussed with the Cat Financial General Counsel to determine if service as an officer may continue.

Exceptions to the appointments noted in a. or b. above shall be approved by the Cat Financial General Counsel.

Unless local laws require otherwise, Cat Financial officers shall consist of:
i. the Cat Financial Business Excellence Council, excluding the president of Caterpillar Insurance entities;
ii. the Cat Financial Controller;
iii. the Cat Financial Treasurer
iv. the Chief Tax Officer of Caterpillar Inc. (appointed as an Assistant Treasurer); and
v. such other officers as the Cat Financial General Counsel shall deem appropriate, including but not limited to the positions of Assistant Secretary.

Unless local laws require otherwise, Cat Financial Subsidiaries shall appoint the following individuals as officers:
i. Managing Director, Country Manager or Business Unit Manager as President;
ii. Finance Manager as Vice President & Chief Financial Officer;
iii. Local Attorney in office or region as Secretary;
iv. Vice President for the region or business unit as Vice President (at their discretion); and
v. the Chief Tax Officer of Caterpillar Inc. (appointed as an Assistant Treasurer)

V. ELECTION OF BOARD MEMBERS:

a. Election as a Director:

i. Unless local laws require otherwise, the Cat Financial board shall consist of the Cat Financial President and the Caterpillar Inc. Group President with responsibility for the Financial Products Division.

ii. Unless local laws require otherwise, members of any Subsidiary board of directors shall consist of the following individuals, in order of preference:

1. Any two or more, if required, of the following:
a. Vice President for the region or business unit;
b. Cat Financial President;
c. Cat Financial Chief Financial Officer;
d. Cat Financial Controller;
e. Cat Financial Treasurer;
f. Cat Financial General Counsel; and

2. The Managing Director, Country or business unit Manager

iii. If local laws require a proportion of the members of any Subsidiary board of directors be residents of the local country, such positions shall consist of one or more of the following individuals, in order of preference:

1. The Managing Director, Country or business unit Manager, if a country resident;
2. The senior financial manager(s) or controller, if a country resident;
3. The local attorney in office, if applicable; or
4. A resident member of the local law firm engaged for corporate matters, subject to the pre-approval process outlined in Section V. b. below.

a. Election as a Director:

i. Unless local laws require otherwise, the Cat Financial board shall consist of the Cat Financial President and the Caterpillar Inc. Group President with responsibility for the Financial Products Division.

ii. Unless local laws require otherwise, members of any Subsidiary board of directors shall consist of the following individuals, in order of preference:

1. Any two or more, if required, of the following:
a. Vice President for the region or business unit;
b. Cat Financial President;
c. Cat Financial Chief Financial Officer;
d. Cat Financial Controller;
e. Cat Financial Treasurer;
f. Cat Financial General Counsel; and

2. The Managing Director, Country or business unit Manager

iii. If local laws require a proportion of the members of any Subsidiary board of directors be residents of the local country, such positions shall consist of one or more of the following individuals, in order of preference:

1. The Managing Director, Country or business unit Manager, if a country resident;
2. The senior financial manager(s) or controller, if a country resident;
3. The local attorney in office, if applicable; or
4. A resident member of the local law firm engaged for corporate matters, subject to the pre-approval process outlined in Section V. b. below.

b. Election of Outside Directors: The election of outside (non-employee) directors could negatively impact administrative efficiency by requiring an unnecessary level of formality and duplication of effort. Therefore, Subsidiary boards generally should not include outside directors, unless there is a compelling business purpose or their election is required by local law. Any outside directors to be elected to the Cat Financial or any Subsidiary board of directors shall first be reviewed by the Cat Financial General Counsel. Any submission of an outside director to the Cat Financial General Counsel for approval, must be accompanied by the following documentation:

i. Biographical summary: A brief summary (in English) of the individual’s name, occupation and a description of how they fit the qualifications necessary to serve as an outside director (note: inclusion of a CV/resume is recommended), including confirmation that the appointment of such director will not adversely impact any of the Subsidiary’s business licenses.

ii. Background Check: Include results of background check conducted by local Human Resources representative as well as confirmation that the director is in good standing with their professional governing body, if applicable (i.e. auditing or legal licensing governing body).

iii. Honorarium proposal: A description of the honorarium, if any, to be provided to the outside director and whether it is consistent with local market standards.

c. Conflicts of Interest: A conflict of interest occurs when a director has a professional or personal interest that may not allow them to represent the best interest of the company. Directors must not allow their personal interests to adversely influence their judgment, objectivity or loyalty to Cat Financial (or any affiliate) in conducting Cat Financial business activities and assignments. Every director must disclose any conflicts of interest whether actual or perceived prior to their appointment. During their appointment, if any actual or perceived conflicts of interest arise, these must be discussed with the Cat Financial General Counsel to determine if service as a director may continue.

Serving as an officer or director of Cat Financial or a Subsidiary is a significant responsibility. All new directors and officers shall receive training from the Corporate Governance Paralegal or the Securities Attorney on their roles, responsibilities and expectations as members of a Cat Financial or Subsidiary board (i.e. duty of care, duty of loyalty, and confidentiality, etc.) upon acceptance of the position.

a. Compensation/Honorarium: Employees of Cat Financial or any Subsidiary who serve as officers and/or directors may not receive additional compensation for their service. Outside directors who are approved by the Cat Financial General Counsel may be entitled to a reasonable and customary honorarium as determined in the Cat Financial General Counsel’s sole discretion in accordance with the submission guidelines noted in Section V b. iii.

b. Ownership of Subsidiary Stock: In some jurisdictions it may be necessary for officers and/or directors to hold an ownership interest in a Subsidiary. In these instances, the SGOC shall be consulted, prior to receiving any ownership interest.

INDEMNIFICATION OF OFFICERS AND DIRECTORS: Cat Financial will indemnify, to the fullest extent permitted under law, officers and directors of Cat Financial and any Subsidiary who act in good faith in their capacities and who become the subject of suits as a result of their position as an officer and/or director. In jurisdictions where indemnification is not permitted, no coverage is provided.

INDEMNIFICATION OF OFFICERS AND DIRECTORS: Cat Financial will indemnify, to the fullest extent permitted under law, officers and directors of Cat Financial and any Subsidiary who act in good faith in their capacities and who become the subject of suits as a result of their position as an officer and/or director. In jurisdictions where indemnification is not permitted, no coverage is provided.

a. Approval of Annual Subsidiary Financial Statements: Subsidiary annual financial statements shall be submitted to the Cat Financial Controller and Vice President responsible for the Subsidiary for approval prior to being approved as part of an annual meeting or filed with any third party.

b. Subsidiary Governance Calendar: Not later than February 15th of each year, the Finance Manager shall submit to Corporate.Paralegal@cat.com a corporate governance calendar for each of their Subsidiaries with dates and expectations of board members and officers for regularly scheduled matters throughout the calendar year, including but not limited to, annual meetings, approval of annual and/or quarterly financial statements and license renewals that require board and/or officer approval, etc. A sample governance calendar is included as Exhibit A to these Corporate Governance Guidelines.

c. Subsidiary Updates: Not later than February 15th of each year, the Finance Manager shall submit to Corporate.Paralegal@cat.com an update of any significant or material changes to their Subsidiary’s organization, business purpose and/or lines of business, including confirmation of whether their governance documents and Subsidiary licenses have been updated to reflect such changes. A sample submission is included as part of Exhibit A to these Corporate Governance Guidelines.

CLMS Assessment Link: https://clms2.cat.com/Saba/Web/Main

Governance Guidelines: https://www.google.com