Baker Hughes 2010 Annual Report Download - page 146

64 B a k e r H u g h e s I n c o r p o r a t e d
Our nonstockholder-approved plans are described below:
1998 Employee Stock Option Plan
The Baker Hughes Incorporated 1998 Employee Stock
Option Plan (the “1998 ESOP”) was adopted effective as of
October 1, 1998. The number of shares authorized for issu-
ance under the 1998 ESOP was 7.0 million shares. Nonquali-
fied stock options may be granted under the 1998 ESOP to
our employees. The exercise price of the options will be equal
to the fair market value per share of our common stock on the
date of grant, and option terms may be up to ten years. Under
the terms and conditions of the option award agreements for
options issued under the 1998 ESOP, options generally vest
and become exercisable in installments over the optionee’s
period of service, and the options vest on an accelerated basis
in the event of a change in control. As of December 31, 2010,
options covering approximately 68,000 shares of our common
stock were outstanding under the 1998 ESOP and options
covering approximately 47,000 shares were exercised during
fiscal year 2010. There are no shares available for grants of
future options as the plan expired on October 1, 2008.
Director Compensation Deferral Plan
The Baker Hughes Incorporated Director Compensation
Deferral Plan, as amended and restated effective July 24, 2002
(the “Deferral Plan”), is intended to provide a means for mem-
bers of our Board of Directors to defer compensation other-
wise payable and provide flexibility with respect to our
compensation policies. Under the provisions of the Deferral
Plan, directors may elect to defer income with respect to
each calendar year. The compensation deferrals may be stock
option-related deferrals or cash-based deferrals. If a director
elects a stock option-related deferral, on the last day of each
calendar quarter he or she will be granted a nonqualified stock
option. The number of shares subject to the stock option is
calculated by multiplying the amount of the deferred compen-
sation that otherwise would have been paid to the director
during the quarter by 4.4 and then dividing by the fair market
value of our common stock on the last day of the quarter. The
per share exercise price of the option will be the fair market
value of a share of our common stock on the date the option
is granted. Stock options granted under the Deferral Plan vest
on the first anniversary of the date of grant and must be exer-
cised within ten years of the date of grant. If a director’s direc-
torship terminates for any reason, any options outstanding will
expire three years after the termination of the directorship.
The maximum aggregate number of shares of our common
stock that may be issued under the Deferral Plan is 0.5 million.
As of December 31, 2010, options covering approximately
3,000 shares of our common stock were outstanding under
the Deferral Plan, there were no shares exercised during fiscal
2010 and approximately 0.5 million shares remained available
for future options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information for this item is set forth in the sections entitled
“Corporate Governance-Director Independence” and “Certain
Relationships and Related Transactions” in our Proxy State-
ment, which sections are incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information concerning principal accounting fees and ser-
vices is set forth in the section entitled “Fees Paid to Deloitte &
Touche LLP” in our Proxy Statement, which section is incorpo-
rated herein by reference.