Baker Hughes 2009 Annual Report Download - page 149

2009 Form 10-K 75
GOVERNANCE AT BAKER HUGHES
Baker Hughes Corporate Governance Guidelines
Our board’s Corporate Governance Guidelines regulate its
relationship with stockholders, the conduct of the company’s
affairs and its relationship with our senior executive management.
The guidelines recognize that the board has a separate
and unique role as the link in the chain of authority between
the stockholders and senior executive management. The Cor-
porate Governance Guidelines can be accessed electronically
at www.bakerhughes.com/investor in the “About Baker
Hughes” section.
The Baker Hughes board consists of 12 directors, including
11 independent non-management directors. The company’s
bylaws allow the board to have between 9 and 12 members.
Expansion above 12 members requires an affirmative vote of
75% of the members of the board. The sole inside director is
Chad C. Deaton, Chairman of the Board, President and Chief
Executive Officer of Baker Hughes. Director H. John Riley
serves as the Lead Director. Directors are elected annually.
Independent non-management directors cannot stand for
re-election at the annual meeting of stockholders following
their 72nd birthday, and must resign if attendance at board
and committee meetings falls below 66%.
The board may waive these requirements if it believes
retention of the board member is in the best interest of our
company. In addition, any nominee for director who receives
a “withhold” vote representing a majority of the votes cast for
his or her election is required to submit a letter of resignation
to the Board’s Governance Committee. The Governance Com-
mittee would recommend to the Board whether or not the
resignation should be accepted.
Baker Hughes Directors At A Glance
• All 11 independent non-management directors serve on no
more than three other public boards.
• The average age of the directors is 66. The average tenure
on the board is approximately nine years.
• The diversity of principal occupations represented on our
board includes Diplomacy (Djerejian), Diversified Industrial
and Manufacturing (Fernandes and Riley), Energy (Cazalot,
Jungels, Nichols and Watson), Executive Search (Gargalli),
Finance (McCall), High Technology (Lash), Industrial Technol-
ogies (Brady) and Oilfield Services (Deaton).
• The board has five meetings scheduled in 2010.
• In 2009, the board held ten meetings and all directors
attended more than 82% of all committee and
board meetings.
• All six members of the Audit/Ethics Committee meet the SEC
requirements of an “audit committee financial expert”. The
board has named Anthony G. Fernandes as its financial expert.
• The Audit/Ethics, Compensation, Finance and Governance
Committees are all comprised solely of independent non-
management directors.
• The board conducts continuing director education and
director orientation.
Committees of the Board
The board has five standing committees – Audit/Ethics,
Compensation, Finance, Governance and Executive. The Audit/
Ethics, Compensation and Governance Committees are com-
prised solely of independent non-management directors in
accordance with NYSE corporate governance listing standards.
The Finance Committee is also comprised of independent non-
management directors. Additionally, the board has adopted
charters for the Audit/Ethics, Compensation and Governance
Committees that comply with the requirements of the NYSE
standards, applicable provisions of the Sarbanes-Oxley Act of
2002 (“SOX”) and SEC rules. Each of the charters has been
posted and is available for public viewing in the “About Baker
Hughes” section of our website at www.bakerhughes.com.
The Audit/Ethics Committee met nine times in 2009. The
Compensation Committee met five times in 2009. The Finance
Committee met four times in 2009. The Governance Commit-
tee met four times in 2009. Independent non-management
directors meet without the CEO on a regular basis.
The Audit/Ethics Committee is comprised of five inde-
pendent non-management directors and is responsible for
assisting the board with the oversight of the integrity of our
financial statements, our compliance with legal and regulatory
requirements, the qualification and independence of our inde-
pendent registered public accounting firm and the performance
of our internal audit function.
The Committee:
• selects the independent registered public accounting firm
used by the company and reviews their performance;
• reviews financial reporting and disclosure issues with
management and the internal auditors;
• establishes guidelines with respect to earnings news releases
and the financial information and earnings guidance pro-
vided to analysts;
• meets periodically with management, the internal auditors
and the independent registered public accounting firm to
review the work of each. The independent registered public
accounting firm and internal auditors have full and free
access to the Audit/Ethics Committee, without management
present, to discuss auditing and financial reporting matters;
• reviews and pre-approves audit and non-audit fees;
• provides assistance to the board in overseeing matters
related to risk analysis and risk management;
• annually reviews compliance with our Business Code of
Conduct and Foreign Corrupt Practices Act policies. The
Baker Hughes Business Code of Conduct and Code of
Ethical Conduct Certifications are available on our website;
• prepares an annual report to stockholders which is published
in our proxy statement (contained herein) and made available
on our website.