Baker Hughes 2010 Annual Report Download - page 31

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2 0 11 P r o x y S t a t e m e n t 19
Performance Unit Metrics
There are three basic performance metrics that apply to
the 2009 and 2010 performance units. The potential amounts
payable under the 2009 and 2010 performance units are
based upon our (1) revenue growth, (2) pre-tax operating mar-
gin, and (3) return on net capital employed for the applicable
performance periods compared to our Peer Group.
Revenue growth is the percentage increase of the revenue
of the relevant company for the relevant one-year or three-year
performance period. Revenue growth for a one-year performance
period is the result of (a) minus (b), divided by (c), where (a)
is the revenue of the relevant company for the fiscal year of
the relevant company that coincides with or ends within the
one-year performance period and (b) and (c) are the revenue
of the relevant company for the fiscal year of the relevant
company that coincides with or ends within the calendar year
immediately preceding the one-year performance period.
Revenue growth for a three-year performance period is the
result of (a) minus (b), divided by (c), where (a) is the revenue
of the relevant company for the fiscal year of the relevant com-
pany that coincides with or ends within the final calendar year
of the three-year performance period, and (b) and (c) are the
revenue of the relevant company for the fiscal year of the rele-
vant company that coincides with or ends within the calendar
year immediately preceding the three-year performance period.
Pre-tax operating margin is the quotient of earnings
before interest and taxes adjusted for non-operating income
(or expenses) for the fiscal year(s) of the relevant company
that coincides with or ends within the relevant one-year or
three-year performance period, divided by the relevant com-
pany’s total revenue during that period of time.
Return on net capital employed is the relevant company’s
earnings before interest and taxes adjusted for non-operating
income (or expenses) for the fiscal year(s) of the relevant
company that coincides with or ends within the relevant
one-year or three-year performance period, divided by the
relevant company’s capital employed for that period of time.
Peer Group
The Peer Group consists of a group of four companies
identified by the Compensation Committee (as listed below):
Peer Group
Halliburton Company
National Oilwell Varco, Inc.
Schlumberger Limited
Weatherford International Ltd.
Amounts Payable Under 2009 Performance Units
for the One-Year Performance Period Starting in 2009
In the case of the performance measurement period start-
ing on January 1, 2009 under the 2009 performance unit
awards, the unit value earned during the 2009 one-year per-
formance measurement period for each of the three revenue
growth, pre-tax operating margin and return on net capital
employed performance goals applicable to the performance
measurement period is one-third of 25 percent of the unit
value amount listed below:
2009 Performance Period
Peer Group Rank 7th 6th 5th 4th 3rd 2nd 1st
Unit Value $ 0 $ 25 $ 50 $ 75 $ 100 $ 150 $ 200
1
2
3
Revenue Growth
Current Period Revenue – Previous Period Revenue
Previous Period Revenue
Final Year Revenue – Revenue in Year Prior to Grant
Revenue in Year Prior to Grant
Earnings Before Interest and Taxes for Period
Total Revenue for Period
Earnings Before Interest and Taxes for Period
End of Period Net Capital Employed (NCE)
Note: For 3-Year Interval Use the Sum of 3-Year PBT
in Numerator and Sum of 3 Years NCE in Denominator
Pre-Tax Operating Margin
Return on Net Capital Employed
(RONCE)
1-Year Interval
3-Year Interval