Baker Hughes 2004 Annual Report Download - page 30

PENSION฀PLAN฀TABLE
Baker฀Hughes฀adopted฀the฀Baker฀Hughes฀Incorporated฀
Pension฀Plan,฀effective฀January฀1,฀2002,฀to฀provide฀benefits฀
to฀its฀U.S.฀employees.฀(Employees฀outside฀the฀U.S.฀are฀covered฀
under฀different฀retirement฀plans.)฀Employees฀who฀are฀officers฀
of฀the฀Company฀participate฀on฀the฀same฀basis฀as฀other฀eligible฀
employees.฀The฀Pension฀Plan฀is฀a฀tax-qualified,฀defined฀benefit฀
plan฀funded฀entirely฀by฀the฀Company.฀Under฀the฀provisions฀
of฀the฀Pension฀Plan,฀a฀cash฀balance฀account฀is฀established฀for฀
each฀participant.฀Company฀contributions฀are฀made฀quarterly฀
to฀the฀accounts,฀and฀the฀contribution฀percentage฀is฀deter-
mined฀by฀the฀employee’s฀age฀on฀the฀last฀day฀of฀the฀quarter฀
and฀is฀applied฀to฀quarterly฀eligible฀compensation.฀In฀addition฀
to฀the฀Company฀contributions,฀the฀cash฀balance฀accounts฀
are฀credited฀with฀interest฀credits฀based฀on฀the฀balance฀in฀the฀
account฀on฀the฀last฀day฀of฀the฀quarter,฀using฀the฀applicable฀
interest฀rate฀provided฀under฀section฀417(e)(3)(A)(ii)(II)฀of฀the฀
Internal฀Revenue฀Code฀of฀1986,฀as฀amended.฀The฀following฀
are฀the฀quarterly฀contribution฀rates฀under฀the฀Pension฀Plan:
Age฀at฀End฀of฀Quarter฀ Percentage฀Contribution
Under฀age฀35฀ 2.0%
฀ 35฀–฀39฀ 2.5%
฀ 40฀–฀44฀ 3.0%
฀ 45฀–฀49฀ 3.5%
50฀and฀older฀ 4.0%
An฀employee฀is฀fully฀vested฀in฀his฀or฀her฀Pension฀Plan฀
account฀after฀five฀years฀of฀service.฀However,฀regardless฀of฀the฀
number฀of฀years฀of฀service,฀an฀employee฀is฀fully฀vested฀if฀the฀
employee฀retires฀from฀Baker฀Hughes฀at฀age฀65฀or฀later,฀or฀
upon฀the฀death฀of฀the฀employee.฀In฀addition,฀employees฀of฀
Baker฀Hughes฀who฀were฀55฀years฀or฀older฀on฀January฀1,฀2002,฀
had฀their฀prior฀years฀of฀service฀with฀Baker฀Hughes฀counted฀
in฀the฀number฀of฀years฀of฀service.฀Employees฀who฀are฀fully฀
vested฀are฀eligible฀for฀early฀retirement฀benefits฀starting฀at฀age฀
55.฀Pension฀Plan฀benefits฀in฀excess฀of฀$5,000฀may฀be฀paid฀in฀
the฀form฀of฀a฀single฀lump฀sum,฀a฀single฀life฀annuity,฀or฀if฀an฀
employee฀is฀married,฀a฀joint฀and฀50%฀survivor฀annuity.฀
Estimated฀annual฀benefits฀payable฀upon฀retirement฀at฀฀
normal฀retirement฀age฀(i.e.,฀age฀65)฀under฀the฀Baker฀Hughes฀
Pension฀Plan฀to฀each฀executive฀named฀in฀this฀Proxy฀Statement฀
are฀reflected฀in฀the฀following฀table.฀The฀retirement฀benefits฀in฀
the฀table฀are฀calculated฀based฀on฀the฀assumptions฀that฀each฀
executive฀officer฀named฀in฀the฀Summary฀Compensation฀Table฀
will฀remain฀an฀employee฀until฀age฀65฀at฀the฀base฀salary฀shown฀
in฀the฀Summary฀Compensation฀Table,฀with฀no฀pay฀increases,฀
cash฀balances฀are฀credited฀at฀the฀rate฀of฀4%฀per฀quarter,฀inter-
est฀is฀credited฀quarterly฀using฀the฀applicable฀rate฀at฀August฀1฀
of฀the฀preceding฀plan฀year,฀and฀the฀terms฀of฀the฀Pension฀Plan฀
remain฀unchanged.
LONG-TERM฀INCENTIVE฀PLAN฀AWARDS฀DURING฀2004฀
FOR฀2003–2004฀PERFORMANCE฀PERIOD
฀ ฀ ฀ ฀฀ ฀ Potential฀Payouts
฀ ฀ ฀ Number฀of฀Shares,฀ Performance฀ Under฀Non-Stock
฀Units฀or฀Other฀ Period฀ Price-Based฀Plans(1)฀Actual
Name฀ Rights(#)(1)฀ Payout฀ Target฀(Dollars)(2)฀ Maximum฀(Dollars)(3)฀ Payout
Michael฀E.฀Wiley(4)฀ –฀ 01/01/03–12/31/04฀ $฀ 285,000฀ $฀ 570,000฀ –฀
Chad฀C.฀Deaton฀ n/a฀ –฀ ฀ –฀ ฀ –฀ –฀
G.฀Stephen฀Finley฀ –฀ 01/01/03–12/31/04฀ ฀ 115,000฀ ฀ 230,000฀ –฀
James฀R.฀Clark฀ –฀ 01/01/03–12/31/04฀ ฀ 67,500฀ ฀ 135,000฀ –฀
Alan฀R.฀Crain,฀Jr.฀ –฀ 01/01/03–12/31/04฀ ฀ 100,000฀ ฀ 200,000฀ –฀
Douglas฀J.฀Wall฀ –฀ 01/01/03–12/31/04฀ ฀ 67,500฀ ฀ 135,000฀ –
(1)฀ Under฀the฀Company’s฀2002฀Director฀&฀Officer฀Long-Term฀Incentive฀Plan,฀individuals฀were฀awarded฀a฀performance฀unit฀effective฀January฀1,฀2003฀that฀subject฀to฀the฀
terms฀and฀conditions฀of฀the฀plan฀would฀have฀entitled฀the฀individual฀to฀receive฀shares฀of฀restricted฀stock.฀If฀the฀Company฀achieved฀a฀first฀or฀second฀ranking฀in฀total฀
shareholder฀return฀for฀the฀applicable฀two-year฀measurement฀period฀ending฀December฀31,฀2004,฀as฀compared฀to฀the฀rankings฀of฀the฀designated฀competitors,฀the฀Com-
pany฀would฀have฀issued฀shares฀of฀its฀restricted฀stock฀equal฀to฀a฀specified฀dollar฀amount.฀The฀calculation฀of฀the฀number฀of฀shares฀of฀restricted฀stock฀to฀be฀issued฀to฀each฀
executive฀officer฀named฀in฀the฀Summary฀Compensation฀Table฀would฀have฀been฀based฀on฀the฀price฀per฀share฀of฀the฀last฀sale฀of฀the฀Company’s฀Common฀Stock฀on฀the฀
last฀trading฀day฀for฀the฀two-year฀period,฀as฀listed฀in฀the฀NYSE฀composite฀transactions.฀The฀restricted฀stock฀would฀have฀vested฀one-year฀from฀the฀date฀of฀issuance.฀For฀
the฀two-year฀period฀ending฀December฀31,฀2004,฀the฀Company฀did฀not฀receive฀the฀requisite฀ranking,฀so฀the฀performance฀unit฀awards฀lapsed฀and฀were฀forfeited฀and฀no฀
restricted฀stock฀was฀awarded.฀See฀the฀“Compensation฀Committee฀Report”฀for฀additional฀information.
(2)฀ The฀“Target”฀was฀the฀equivalent฀of฀the฀attainment฀of฀the฀second฀rank฀in฀total฀shareholder฀return฀for฀the฀applicable฀two-year฀period฀ending฀December฀31,฀2004.
(3)฀ The฀“Maximum”฀was฀the฀equivalent฀of฀the฀attainment฀of฀first฀rank฀in฀total฀shareholder฀return฀for฀the฀applicable฀two-year฀period฀ending฀December฀31,฀2004.
(4)฀ Mr.฀Wiley฀retired฀from฀the฀Company฀on฀October฀25,฀2004.฀In฀accordance฀with฀the฀terms฀and฀conditions฀of฀the฀performance฀award฀agreements,฀Mr.฀Wiley฀forfeited฀his฀
performance฀award฀units฀and฀received฀no฀payment฀under฀these฀awards.
14฀฀฀฀Baker฀Hughes฀Incorporated