Baker Hughes 2010 Annual Report Download - page 18

6 B a k e r H u g h e s I n c o r p o r a t e d
Election Policy
It is the policy of the Board of Directors that any nominee
for director who receives a “withhold” vote representing a
majority of the votes cast for his or her election would be
required to submit a letter of resignation to the Board’s Gov-
ernance Committee. The Governance Committee would rec-
ommend to the Board whether or not the resignation should
be accepted. Pursuant to the Company’s Bylaws, in case of
a vacancy on the Board of Directors, a majority of the remain-
ing directors will appoint a successor, and the director so
appointed will hold office until the next annual meeting or
until his or her successor is elected and qualified or until his
or her earlier death, retirement, resignation or removal.
CORPORATE GOVERNANCE
The Company’s Board of Directors believes the purpose
of corporate governance is to maximize stockholder value in
a manner consistent with legal requirements and the highest
standards of integrity. The Board has adopted and adheres to
corporate governance practice, which the Board and manage-
ment believe promote this purpose, are sound and represent
best practices. The Board periodically reviews these governance
practices, Delaware law (the state in which the Company is
incorporated), the rules and listing standards of the NYSE and
SEC regulations, as well as best practices suggested by recog-
nized governance authorities. The Board has established the
Company’s Corporate Governance Guidelines as the principles
of conduct of the Company’s business affairs to benefit its
stockholders, which Guidelines conform to the NYSE corporate
governance listing standards and SEC rules. The Corporate
Governance Guidelines are attached as Annex A to this Proxy
Statement, posted under the “Corporate Governance” section
of the Company’s website at www.bakerhughes.com/investor
and are also available upon request to the Company’s Corpo-
rate Secretary.
Board of Directors
During the fiscal year ended December 31, 2010, the Board
of Directors held five meetings, the Audit/Ethics Committee
held thirteen meetings, the Compensation Committee held
four meetings, the Governance Committee held four meetings
and the Finance Committee held four meetings. Each director
attended more than 92% of the total number of meetings
of the Company’s Board of Directors and of the respective
Committees on which he or she served. Six of the Company’s
eleven directors attended the Company’s 2010 Annual Meet-
ing. During fiscal year 2010, each non-management director
was paid an annual retainer of $75,000. The Lead Director
received an additional annual retainer of $15,000. The Audit/
Ethics Committee Chair received an additional annual retainer
of $20,000. Each of the other non-management Committee
Chairs received an additional annual retainer of $15,000. Each
of the members of the Audit/Ethics Committee, excluding the
Chair, received an additional annual retainer of $10,000. Each
of the members, excluding the Chair, of the Compensation,
Finance and Governance Committees received an additional
annual retainer of $5,000. Each non-management director
also received annual non-retainer equity in a total amount of
$200,000, in the form of (i) restricted shares of the Company’s
Common Stock with a value of $140,000 issued in January of
each year that generally will vest one-third on the annual anni-
versary date of the award (however, the restricted shares, to
the extent not previously vested or forfeited, will become fully
vested upon retirement or on the annual meeting of stock-
holders next following the date the non-management director
attains the age of 72); and (ii) options to acquire the Company’s
Common Stock with a value of $30,000 issued in each of Jan-
uary and July. The options will vest one-third each year begin-
ning on the first anniversary date of the grant of the option
award (however, the options, to the extent not previously
vested or forfeited, will become fully vested upon retirement
or on the annual meeting of stockholders next following the
date the non-management director attains the age of 72).
Pursuant to the Company’s acquisition of BJ Services Company,
the Board of Directors appointed Messrs. Stewart and Payne
as members of the Board, effective April 28, 2010. During the
fiscal year ended December 31, 2010, Messrs. Stewart and
Payne received the annual retainer of $75,000 on a pro-rata
basis, with Mr. Stewart receiving an additional annual retainer
of $5,000 on a pro-rata basis as a member of the Finance
Committee. Messrs. Stewart and Payne received non-retainer
equity in the form of options to acquire the Company’s Com-
mon Stock with a value of $30,000 on July 21, 2010 and
$4,826 on July 22, 2010. The Company previously provided
benefits under a Directors Retirement Plan, which Plan remains
in effect until all benefits accrued thereunder are paid in
accordance with the current terms and conditions of that Plan.
No additional benefits have been accrued under the Plan since
December 31, 2001. Messrs. Djerejian, Fernandes, Nichols,
Riley, Watson and Ms. Gargalli have accrued benefits under
the Plan.
Director Independence
All members of the Board of Directors, other than
Mr. Deaton, the Company’s Chairman and Chief Executive
Officer, Mr. Stewart, the former chairman, president and
chief executive officer of BJ Services, Mr. Payne, a former
director of BJ Services who is not a nominee for the 2011
Board of Directors, and Mr. Nichols satisfy the independence
requirements of the NYSE. During fiscal year 2010, sales from
the Company to Devon Energy Corporation exceeded the two
percent test under Section 303A.02(b)(v) of the NYSE’s Listed
Company Manual. Therefore, the Board of Directors deter-
mined that Mr. Nichols no longer satisfied the independence
requirements of the NYSE and accepted his resignation from
the Compensation Committee and the Audit/Ethics Committee
effective as of February 23, 2011. In addition, the Board has
adopted a “Policy for Director Independence, Audit/Ethics
Committee Members and Audit Committee Financial Expert”
(“Policy for Director Independence”) included as Exhibit C to
the Corporate Governance Guidelines, which are attached as
Annex A to this Proxy Statement. Such Policy supplements the
NYSE independence requirements. Directors who meet these
independence standards are considered to be “independent”
as defined therein. The Board has determined that all the
nominees for election at this Annual Meeting, other than
Messrs. Deaton, Nichols and Stewart, meet these standards.