Baker Hughes 2009 Annual Report Download - page 44

34 Baker Hughes Incorporated
John A. O’Donnell
Mr. O’Donnell’s options to purchase an aggregate of
34,343 of our shares, with a value of $40.48 per share would
have become fully exercisable on December 31, 2009, if a
Change of Control were to have occurred on that date. Under
the terms of Mr. O’Donnell’s stock options, he would have
to pay an aggregate of $1,495,186 to purchase these shares.
Mr. O’Donnell’s options with respect to 26,903 of our shares
were in-the-money (per share stock value greater than per
share exercise price) as of December 31, 2009. The maximum
value of the accelerated vesting of these in-the-money options
would have been $146,194 ($40.48 per share value on
December 31, 2009, multiplied by 26,903 of our shares sub-
ject to the options minus $942,839, the aggregate exercise
price for the options).
The substantial risk of forfeiture restrictions applicable to
15,653 shares of our stock granted to Mr. O’Donnell would
have lapsed on December 31, 2009, if a Change of Control
were to have occurred on that date. The maximum value of
this accelerated vesting of Mr. O’Donnell’s restricted stock
awards would have been $633,633 ($40.48 per share value
on December 31, 2009, multiplied by 15,653 of our shares
subject to Mr. O’Donnell’s unvested restricted stock awards).
We estimate that if a Change in Control were to have
occurred on December 31, 2009, but Mr. O’Donnell had not
incurred a termination of employment, the value of the para-
chute payment tax gross-up payment that would have been
due by us (or our successor) to Mr. O’Donnell is $0.
Payments in the Event of a Change in Control and
Termination of Employment by the Senior Executive
for Good Reason or by the Company or its Successor
Without Cause
Pursuant to the Change in Control Agreements, the
Company (or its successor) pays severance benefits to a Senior
Executive if the Senior Executive’s employment is terminated
following, or in connection with, a Change in Control and
during the term unless: (i) the Senior Executive resigns without
good reason; (ii) the Company terminates the employment of
the Senior Executive for cause or (iii) the employment of the
Senior Executive is terminated by reason of death or disability.
Under the Change in Control Agreements “good reason”
includes: (i) the assignment to the Senior Executive of any
duties or responsibilities which are substantially diminished
from those in effect immediately prior to the Change in
Control; (ii) a reduction in the Senior Executive’s base salary;
(iii) the relocation of the Senior Executive’s principal place of
employment to a location more than 50 miles from the Senior
Executive’s principal place of employment immediately prior
to the Change in Control or our requiring the Senior Executive
to be based anywhere other than such principal place of
employment; (iv) our failure to pay the Senior Executive any
portion of his current compensation or to pay him any portion
of an installment of deferred compensation within seven days
of the date the payment is due; (v) our failure to continue in
effect any compensation plan in which the Senior Executive
participated immediately prior to the Change in Control which
is material to his total compensation or (vi) our failure to
continue to provide the Senior Executive with benefits sub-
stantially similar to those enjoyed by him under any of our
pension, savings, life insurance, medical, health and accident,
or disability plans in which he was participating immediately
prior to the Change in Control, or our taking any action that
would materially reduce any of such benefits or deprive the
Senior Executive of any material fringe benefit or perquisite
enjoyed by the Senior Executive, or our failure to provide the
Senior Executive with the number of paid vacation days to
which he is entitled.
Under the Change in Control Agreements “cause” includes:
(i) the willful and continued failure by the Senior Executive to
substantially perform his duties or (ii) the willful engaging by
the Senior Executive in conduct which is materially injurious
to us or our affiliates.
Under the Change in Control Agreements “disability”
means the Senior Executive’s incapacity due to physical or
mental illness that has caused the Senior Executive to be
absent from full-time performance of his duties with us for
a period of six consecutive months.
If the Senior Executive meets the criteria for payment of
severance benefits due to termination of employment follow-
ing a Change in Control during the term as described above,
he will receive the following benefits in addition to any bene-
fits he is due under the Company’s employee benefit plans
and equity and incentive compensation plans, the value of
accelerated vesting of equity based compensation and other
benefits described above under the heading “Payments in
the Event of a Change in Control”:
a. a lump sum payment equal to three times the Senior Execu-
tive’s Highest Base Salary;
b. a lump sum payment equal to the Senior Executive’s Highest
Bonus Amount, prorated based upon the number of days
of his service during the performance period (reduced by
any payments received by the Senior Executive under the
Company’s Annual Incentive Plan, as amended, in connec-
tion with the Change in Control if the Senior Executive’s
termination of employment occurs during the same calendar
year in which the Change in Control occurs);
c. a lump sum payment equal to three times the greater of
(i) the Senior Executive’s Highest Bonus Amount or (ii) the
Senior Executive’s Highest Base Salary multiplied by the
Senior Executive’s applicable multiple, which is 1.20; .80;
.75; .70; and .70 for Messrs. Deaton, Ragauss; Crain;
Craighead and O’Donnell, respectively;