Baker Hughes 2004 Annual Report Download - page 31

฀ Approximate฀Years฀of฀ Estimated฀Annual
฀ Credited฀Service฀at฀ Benefits฀Payable฀at
Named฀Officer฀ Anticipated฀Retirement฀ Anticipated฀Retirement
Michael฀E.฀Wiley(1)฀ Retired฀ $฀ 0.00
Chad฀C.฀Deaton฀ 13฀ ฀฀ 16,374.96
G.฀Stephen฀Finley฀ 13฀ ฀฀ 16,789.32
James฀R.฀Clark฀ 13฀ ฀฀ 15,622.08
Alan฀R.฀Crain,฀Jr.฀ 14฀ ฀฀ 17,591.28
Douglas฀J.฀Wall฀ 16฀ ฀ 19,158.60
(1)฀ Mr.฀Wiley฀retired฀on฀October฀25,฀2004฀and฀was฀not฀fully฀vested฀and฀will฀not฀
receive฀any฀benefit฀under฀the฀Baker฀Hughes฀Pension฀Plan.
In฀addition฀to฀the฀Pension฀Plan,฀the฀Company฀has฀a฀Sup-
plemental฀Retirement฀Plan฀to฀provide฀covered฀executives฀with฀
the฀total฀amount฀of฀retirement฀benefit฀they฀would฀have฀other-
wise฀received฀under฀the฀Pension฀Plan฀but฀for฀legislated฀com-
pensation฀ceilings฀in฀compliance฀with฀certain฀sections฀of฀the฀
Internal฀Revenue฀Code,฀which฀limit฀retirement฀benefits฀payable฀
under฀qualified฀plans.฀In฀accordance฀with฀these฀legislated฀ceil-
ings,฀eligible฀compensation฀under฀the฀Pension฀Plan฀was฀limited฀
to฀$205,000฀in฀2004.฀The฀compensation฀limit฀is฀assumed,฀for฀
purposes฀of฀determining฀estimated฀benefits฀shown฀in฀the฀
above฀table,฀to฀increase฀in฀future฀years,฀based฀on฀estimated฀
cost-of-living฀increases฀applicable฀to฀such฀limit.฀The฀ceiling฀may฀
be฀adjusted฀in฀the฀future฀by฀regulations฀issued฀under฀the฀Inter-
nal฀Revenue฀Code.฀See฀Footnote฀(1)฀to฀the฀table฀under฀the฀
caption฀“Summary฀Compensation฀Table.”
EMPLOYMENT,฀CHANGE฀IN฀CONTROL,฀SEVERANCE฀
AND฀INDEMNIFICATION฀AGREEMENTS฀
Employment฀Agreement
The฀Company฀has฀an฀employment฀agreement฀with฀Mr.฀
Chad฀C.฀Deaton,฀dated฀as฀of฀October฀25,฀2004,฀which฀pro-
vides฀for฀the฀employment฀of฀Mr.฀Deaton฀for฀an฀initial฀two-year฀
period฀ending฀October฀25,฀2006,฀with฀automatic฀one-year฀
renewals฀unless฀either฀party฀provides฀a฀notice฀not฀to฀extend฀
the฀employment฀agreement฀at฀least฀thirteen฀months฀prior฀to฀
the฀then฀current฀expiration฀date.฀During฀the฀term฀of฀the฀
employment฀agreement,฀Mr.฀Deaton฀is฀entitled฀to฀receive฀the฀
following,฀all฀as฀established฀from฀time฀to฀time฀by฀the฀Board฀of฀
Directors฀or฀the฀Compensation฀Committee:
•฀ a฀base฀salary;
•฀ the฀opportunity฀to฀earn฀annual฀cash฀bonuses฀in฀amounts฀
that฀may฀vary฀from฀year฀to฀year฀and฀that฀are฀based฀upon฀
achievement฀of฀performance฀goals;
•฀ long-term฀incentives฀in฀the฀form฀of฀equity-based฀compen-
sation฀no฀less฀favorable฀than฀awards฀made฀to฀other฀senior฀
executives฀of฀the฀Company฀and฀that฀are฀commensurate฀
with฀awards฀granted฀to฀CEOs฀of฀other฀public฀companies฀
of฀a฀similar฀size฀to฀the฀Company;฀and
•฀ benefits฀and฀perquisites฀that฀other฀officers฀and฀employees฀
of฀the฀Company฀are฀entitled฀to฀receive.
Mr.฀Deaton’s฀base฀salary฀is฀to฀be฀reviewed฀at฀least฀annually฀
during฀the฀term฀of฀the฀employment฀agreement฀and฀may฀be฀
increased฀(but฀not฀decreased)฀based฀upon฀his฀performance฀
during฀the฀year.฀
Upon฀the฀termination฀of฀Mr.฀Deaton’s฀employment฀due฀to฀
his฀Disability฀(as฀defined฀in฀the฀employment฀agreement)฀or฀his฀
death,฀he฀or฀his฀beneficiary฀is฀to฀be฀paid฀a฀lump฀sum฀in฀cash฀
equal฀to฀one-half฀his฀then฀base฀salary฀for฀each฀year฀(prorated฀
for฀partial฀years)฀during฀the฀remaining฀term฀of฀the฀employ-
ment฀agreement฀and฀a฀lump฀sum฀in฀cash฀equal฀to฀his฀
expected฀value฀incentive฀bonus฀for฀the฀year฀of฀termination.฀
Upon฀termination฀of฀Mr.฀Deaton’s฀employment฀by฀him฀for฀
Good฀Reason฀(as฀defined฀in฀the฀employment฀agreement)฀or฀
by฀the฀Company฀without฀Cause฀(as฀defined฀in฀the฀employ-
ment฀agreement),฀he฀is฀entitled฀to:
(i)฀ a฀lump฀sum฀cash฀payment฀in฀an฀amount฀equal฀to฀two฀
times฀his฀then฀base฀salary;฀
(ii)฀ a฀lump฀sum฀cash฀payment฀equal฀to฀the฀expected฀value฀of฀
his฀incentive฀bonus฀for฀the฀year฀of฀termination,฀prorated฀
to฀the฀date฀of฀termination;฀
(iii)฀ for฀the฀remainder฀of฀the฀term฀of฀the฀employment฀agree-
ment,฀continuation฀of฀certain฀executive฀perquisites฀and฀
medical฀insurance฀benefits;฀and
(iv)฀ for฀the฀remainder฀of฀the฀term฀of฀the฀employment฀agree-
ment,฀continued฀employer฀contributions฀to฀the฀Company’s฀
Supplemental฀Retirement฀Plan.
However,฀the฀foregoing฀benefits฀are฀not฀payable฀if฀฀
Mr.฀Deaton฀is฀entitled฀to฀benefits฀under฀his฀2004฀Change฀
in฀Control฀Agreement฀discussed฀below.
If฀Mr.฀Deaton’s฀employment฀is฀terminated฀by฀him฀for฀any฀
reason฀other฀than฀a฀Good฀Reason฀(as฀defined฀in฀the฀employ-
ment฀agreement)฀or฀by฀the฀Company฀for฀Cause฀(as฀defined฀in฀
the฀employment฀agreement),฀he฀is฀to฀receive฀only฀those฀vested฀
benefits฀to฀which฀he฀is฀entitled฀under฀the฀terms฀of฀the฀
employee฀benefit฀plans฀in฀which฀he฀is฀a฀participant฀as฀of฀the฀
date฀of฀termination฀and฀a฀lump฀sum฀amount฀in฀cash฀equal฀to฀
the฀sum฀of฀(i)฀his฀base฀salary฀through฀the฀date฀of฀termination;฀
(ii)฀any฀compensation฀previously฀deferred฀by฀him฀(together฀
with฀any฀accrued฀interest฀or฀earnings฀thereon)฀and฀any฀
accrued฀vacation฀pay;฀and฀(iii)฀any฀other฀amounts฀due฀him฀
as฀of฀the฀date฀of฀termination,฀in฀each฀case฀to฀the฀extent฀not฀
theretofore฀paid.
During฀the฀term฀of฀the฀employment฀agreement฀and฀for฀a฀
period฀of฀two฀years฀following฀termination฀of฀the฀employment฀
agreement,฀Mr.฀Deaton฀is฀prohibited฀from฀(i)฀engaging฀in฀
Competition฀(as฀defined฀in฀the฀employment฀agreement)฀
with฀the฀Company฀and฀(ii)฀soliciting฀customers,฀employees฀
and฀consultants฀of฀the฀Company.฀To฀the฀extent฀any฀provision฀
is฀covered฀by฀both฀the฀employment฀agreement฀and฀the฀
2004฀Change฀in฀Control฀Agreement฀described฀and฀defined฀
below,฀the฀2004฀Change฀in฀Control฀Agreement฀provision฀so฀
covered฀will฀supersede฀the฀employment฀agreement฀provision.
Change฀in฀Control฀Agreements
In฀addition฀to฀the฀employment฀agreement฀described฀
above,฀the฀Company฀during฀2004฀entered฀into฀change฀in฀con-
trol฀agreements฀(“2004฀Change฀in฀Control฀Agreements”)฀with฀
Messrs.฀Chad฀C.฀Deaton,฀G.฀Stephen฀Finley,฀James฀R.฀Clark,฀
Alan฀R.฀Crain,฀Jr.฀and฀Douglas฀J.฀Wall฀(“Named฀Officers”),฀as฀
well฀as฀eight฀other฀officers฀of฀the฀Company.฀The฀2004฀Change฀
in฀Control฀Agreements฀provide฀for฀payment฀of฀certain฀benefits฀
to฀these฀officers฀as฀a฀result฀of฀termination฀of฀employment฀฀
Proxy฀Statement฀฀฀฀฀15