Educational Testing Service

“All Trustees received a copy of Form 990 for review and information prior to Board of Trustees meeting. Form 990 was reviewed by the Board of Trustees' Audit Committee and the full Board of Trustees prior to filing.”

“The Trustees of Educational Testing Service, individually and collectively, are expected to act in accordance with the highest standards of ethical behavior. Annually, the Audit Committee reviews the ETS Code of Ethics for Members of the Board of Trustees. Subsequently, each Trustee receives a copy of the Code of Ethics and signs a statement agreeing to abide by the Code. The Code includes a policy on Conflict of Interest. The Trustees annually complete a Trustee Disclosure Statement and a Trustee Affiliation Form. The Disclosure Statement requests if there are any Trustees with material financial interest to which ETS is a party. The Affiliation Form requests information regarding the Trustees employment as a staff member or as a consultant of ETS, as well as their affiliation with other organizations. The Corporate Secretary reviews these disclosures for potential conflicts or the potential appearance of a conflict. Should a situation be disclosed that might be in contrast with the Code of Ethics, the Corporate Secretary would seek resolution with the involvement of the appropriate authority such as the Audit Committee or the ETS General Counsel and Chief Ethics Officer. Intrinsic to the policy is a Trustee rescuing themselves on certain matters or resigning from the Board to prevent a conflict of interest or avoid an appearance of a conflict of interest. Failure to respond to the annual disclosure process would result in the requisite follow up by the Corporate Secretary. Candidates for Trustees receive the Code of Ethics and are required to complete the Affiliations Form prior to standing for election. Trustees can obtain assistance with the interpretation or administration of the Code of Ethics or procedures from the Corporate Secretary or the General Counsel and Chief Ethics Officer. Educational Testing Service requires that employees, including officers, who are uncertain whether an outside activity comes within the scope of ETS's Code of Ethics policy, which contains its Conflict of Interest Policy, to discuss the matter with their supervisors. Employees wishing to engage in outside activities must submit an Outside Activities Report to their division director for review and approval prior to engaging in the activity. Employees must submit an amended report whenever the activity changes. The report is reviewed and the employee is informed whether the request is approved. The employee's division Vice President and the Vice President of Strategic Workforce Solutions (SWS)(ETS's Human Resources Department) receive a copy of all such reports regardless of whether the request is approved. Any situation involving a potential conflict of interest must be reviewed by SWS to verify that no conflict exists. Any employee who acquires information that gives the employee reason to believe that any employee, officer or trustee is engaged in conduct that is prohibited by ETS's Code of Ethics, or that any sales representative, distributor or other person or firm representing ETS in any transaction is engaged in the type of conduct (whether or not in connection with a transaction involving ETS or its products) which, if engaged in by an employee, would violate this policy is required to report this information immediately. All complaints regarding potential conflicts of interest are investigated promptly, and where necessary, immediate and appropriate action is taken to stop and remedy any such conduct. Any employee or officer, found in violation of this policy will be subject to disciplinary action, up to and including termination, depending upon the severity of the violation. This policy is reviewed on an annual basis by the Vice President of Strategic Workforce Solutions. All ETS employees receive a copy of the Code of Ethics on an annual basis. The annual review and signature indicating their agreement to comply with the policy is mandatory as part of employment with ETS.”

“ETS's Board of Trustees ("Board") engages an independent external organization, a leading consultant in executive compensation, to review the structure and process of Officer compensation to ensure practices that are within IRS and not-for-profit guidelines. The external organization issues a letter to the Board that presents their expert opinion as to the reasonableness and comparability of the total remuneration of the executives. The Board has reviewed and agreed upon the analysis and the Opinion Letter as to the Reasonableness of the Total Compensation Provided for the executives working for ETS. The independent, external executive compensation consultant prepares a Letter of Reasonableness regarding the analysis of Officer pay consistent with government guidelines which is presented to the Board Committee on Governance and Human Resources and the full Board for review, comment and approval.”

“Currently, ETS does not provide its governing documents, conflict of interest policy, or financial statements available to the public. This process is consistent with prior years.”

“Test Admin and Consultants: Program service expenses 336,773,290. Management and general expenses 22,149,692. Fundraising expenses 0. Total expenses 358,922,982. Subcontracting Costs: Program service expenses 103,052,617. Management and general expenses 20,333,443. Fundraising expenses 0. Total expenses 123,386,060.”

“Equity earnings in affiliates 65,851,000. Income from discontinued operations -3,291,260. ETS Tech disregarded entity income -1,786,000. Capstar disregarded entity income 28,000. Cumulative effect of pension adjustment -6,691,605.”