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STOCK฀OPTIONS฀GRANTED฀DURING฀2004
The฀following฀table฀sets฀forth฀certain฀information฀regarding฀stock฀options฀granted฀during฀fiscal฀year฀2004฀to฀the฀persons฀named฀
in฀the฀Summary฀Compensation฀Table฀above.฀The฀theoretical฀values฀on฀the฀date฀of฀the฀grant฀of฀stock฀options฀granted฀in฀2004฀shown฀
below฀are฀presented฀pursuant฀to฀SEC฀rules฀and฀are฀calculated฀using฀the฀Black-Scholes฀Model฀for฀pricing฀options.฀The฀theoretical฀฀
values฀of฀options฀trading฀in฀the฀stock฀markets฀do฀not฀necessarily฀bear฀a฀relationship฀to฀the฀compensation฀cost฀to฀the฀Company฀or฀
potential฀gain฀realized฀by฀an฀executive.฀The฀actual฀amount,฀if฀any,฀realized฀upon฀exercise฀of฀stock฀options฀will฀depend฀upon฀the฀mar-
ket฀price฀of฀the฀Common฀Stock฀relative฀to฀the฀exercise฀price฀per฀share฀of฀the฀stock฀option฀at฀the฀time฀the฀stock฀option฀is฀exercised.฀
There฀is฀no฀assurance฀that฀the฀theoretical฀values฀of฀stock฀options฀reflected฀in฀this฀table฀actually฀will฀be฀realized.
฀ ฀ %฀of฀Total฀
Name฀and฀ Options฀ Options฀Granted฀ Exercise฀ Expiration฀ Grant฀Date฀
Date฀of฀Option฀Grant฀ Granted฀ to฀Employees฀ Price฀ Date฀ Theoretical฀Value(1)
Michael฀E.฀Wiley(2)
฀ 01/28/2004฀ 150,000฀ 12.6%฀ $฀ 35.81฀ 10/25/2007฀ $฀ 1,678,980
฀ 07/28/2004฀ 150,000฀ 11.6%฀ ฀ 39.23฀ 10/25/2007฀ ฀ 1,658,385
Chad฀C.฀Deaton
฀ 10/25/2004฀ 75,000฀ 100.0%฀ ฀ 43.39฀ 10/25/2014฀ ฀ 892,463
G.฀Stephen฀Finley
฀ 01/28/2004฀ 39,500฀ 3.3%฀ ฀ 35.81฀ 01/28/2014฀ ฀ 442,131
฀ 07/28/2004฀ 39,500฀ 3.1%฀ ฀ 39.23฀ 07/28/2014฀ ฀ 436,708
James฀R.฀Clark
฀ 01/28/2004฀ 39,500฀ 3.3%฀ ฀ 35.81฀ 01/28/2014฀ ฀ 442,131
฀ 07/28/2004฀ 59,000฀ 4.6%฀ ฀ 39.23฀ 07/28/2014฀ ฀ 652,298
Alan฀R.฀Crain,฀Jr.
฀ 01/28/2004฀ 27,500฀ 2.3%฀ ฀ 35.81฀ 01/28/2014฀ ฀ 307,813
฀ 07/28/2004฀ 27,500฀ 2.1%฀ ฀ 39.23฀ 07/28/2014฀ ฀ 304,037
Douglas฀J.฀Wall
฀ 01/28/2004฀ 14,000฀ 1.8%฀ ฀ 35.81฀ 01/28/2014฀ ฀ 156,705
฀ 07/28/2004฀ 14,000฀ 1.2%฀ ฀ 39.23฀ 07/28/2014฀ ฀ 154,783
(1)฀ The฀theoretical฀values฀on฀the฀grant฀date฀are฀calculated฀under฀the฀Black-Scholes฀Model.฀The฀Black-Scholes฀Model฀is฀a฀mathematical฀formula฀used฀to฀value฀options฀
traded฀on฀stock฀exchanges.฀This฀formula฀considers฀a฀number฀of฀factors฀to฀estimate฀the฀option’s฀theoretical฀value,฀including฀the฀stock’s฀historical฀volatility,฀the฀dividend฀
rate,฀the฀expected฀life฀of฀the฀option฀and฀risk-free฀interest฀rates.฀The฀grant฀date฀theoretical฀value฀assumes฀a฀volatility฀of฀39.9%,฀a฀dividend฀yield฀of฀1.3%,฀a฀risk-free฀rate฀
of฀return฀of฀2.80%฀and฀an฀expected฀option฀life฀of฀3.5฀years.
(2)฀ Upon฀Mr.฀Wiley’s฀retirement฀all฀of฀his฀2004฀options฀vested฀with฀a฀three-year฀exercise฀period฀from฀October฀25,฀2004.
12฀฀฀฀Baker฀Hughes฀Incorporated