Baker Hughes 2009 Annual Report Download - page 19

2009 Proxy Statement 9
Audit/Ethics Committee
The Audit/Ethics Committee held nine meetings during
fiscal year 2009. The Board of Directors has determined that
each of the Audit/Ethics Committee members meet the NYSE
standards for independence as well as those contained in the
Company’s “Policy for Director Independence”. The Audit/Ethics
Committee Charter is attached as Annex C to this Proxy
Statement and can be accessed electronically under the
“Corporate Governance” section of the Company’s website at
www.bakerhughes.com/investor. The Vice President, Internal
Audit and the Corporate internal audit function report directly
to the Audit/Ethics Committee. The Company’s Corporate
Internal Audit Department sends written reports quarterly to
the Audit/Ethics Committee on its audit findings and the status
of its internal audit projects. The Audit/Ethics Committee pro-
vides assistance to the Board of Directors in overseeing matters
relating to the accounting and reporting practices of the Com-
pany, the adequacy of the Company’s disclosure controls and
internal controls, the quality and integrity of the quarterly and
annual financial statements of the Company, the performance
of the Company’s internal audit function, the review and pre-
approval of the current year audit and non-audit fees and the
Company’s risk analysis and risk management procedures. In
addition, the Audit/Ethics Committee oversees the Company’s
compliance programs relating to legal and regulatory require-
ments. The Audit/Ethics Committee has developed “Procedures
for the Receipt, Retention and Treatment of Complaints” to
address complaints received by the Company regarding
accounting, internal controls or auditing matters. Such proce-
dures are included as Exhibit F to the Corporate Governance
Guidelines. The Corporate Governance Guidelines are attached
as Annex B to this Proxy Statement, posted under the “Corpo-
rate Governance” section of the Company’s website at www.
bakerhughes.com/investor and are also available upon request
to the Company’s Corporate Secretary.
The Audit/Ethics Committee also is responsible for the
selection and hiring of the Company’s Independent Registered
Public Accounting Firm. To promote independence of the
audit, the Audit/Ethics Committee consults separately and
jointly with the Company’s Independent Registered Public
Accounting Firm, the internal auditors and management.
The Board has reviewed the experience of the members of
the Audit/Ethics Committee and has found that each member
of the Committee meets the qualifications to be an “audit com-
mittee financial expert” under the SEC rules issued pursuant to
SOX. The Board has designated Anthony G. Fernandes as the
member of the Committee who serves as the “audit committee
financial expert” of the Company’s Audit/Ethics Committee.
Compensation Committee
The Compensation Committee held five meetings during
fiscal year 2009. The Board of Directors has determined that
the Compensation Committee members meet the NYSE stan-
dards for independence as well as those contained in the
Company’s “Policy for Director Independence”. The Compen-
sation Committee Charter can be accessed electronically
under the “Corporate Governance” section of the Company’s
website at www.bakerhughes.com/investor. The functions
performed by the Compensation Committee include reviewing
and approving Baker Hughes’ executive salary and bonus
structure; reviewing Baker Hughes’ incentive compensation
and stock award plans (and approving grants thereunder),
employee retirement plans and the employee stock purchase
plan; setting bonus goals; approving salary and bonus awards
to key executives; recommending incentive compensation and
stock award plans for approval by stockholders; and reviewing
management succession plans.
Governance Committee
The Governance Committee held four meetings during
fiscal year 2009. The Board of Directors has determined that
the Governance Committee members meet the NYSE standards
for independence as well as those contained in the Company’s
“Policy for Director Independence”. A current copy of the
Governance Committee Charter can be accessed electronically
under the “Corporate Governance” section of the Company’s
website at www.bakerhughes.com/investor. The functions
performed by the Governance Committee include overseeing
the Company’s corporate governance affairs, health, safety
and environmental compliance functions, government relations
and monitoring compliance with the Corporate Governance
Guidelines. In addition, the Governance Committee proposes
candidates for the Board of Directors, proposes candidates to
fill vacancies on the Board, reviews the structure and composi-
tion of the Board, considers the qualifications required for con-
tinuing Board service and recommends directors’ compensation.
The Governance Committee annually reviews the Company’s
Policy Statement on Shareholders’ Rights Plans and reports any
recommendations to the Board of Directors.
The Governance Committee has implemented policies
regarding Board membership. The Governance Committee will
consider candidates based upon the size and existing composi-
tion of the Board, the number and qualifications of candidates,
the benefit of continuity on the Board and the relevance of the
candidate’s background and experience to issues facing the
Company. The criteria used for selecting directors are described
in the Company’s “Guidelines for Membership on the Board of
Directors”, included as Exhibit A to the Corporate Governance
Guidelines attached as Annex B to this Proxy Statement. In
addition, the Company has established a formal process for the
selection of candidates, as described in the Company’s “Selec-
tion Process for New Board of Directors Candidates” included
as Exhibit B to the Corporate Governance Guidelines, and candi-
dates are evaluated based on their background, experience and
other relevant factors as described in the Guidelines for Mem-
bership on the Board of Directors. The Board and the Gover-
nance Committee will evaluate candidates properly proposed
by stockholders in the same manner as all other candidates.
The Governance Committee has established, in accordance
with the Company’s Bylaws regarding stockholder nominees,
a policy that it will consider director candidates recommended
by stockholders. Recommendations that stockholders desire
to make for the 2011 Annual Meeting should be submitted
between October 13, 2010 and November 12, 2010 in accor-
dance with the Company’s Bylaws and “Policy and Submission
Procedures for Stockholder Recommended Director Candidates”