Baker Hughes 2010 Annual Report Download - page 43

2 0 11 P r o x y S t a t e m e n t 31
• an amount equal to his Annual Incentive Compensation Plan
bonus computed as if the target level of performance had
been achieved, multiplied by a fraction, the numerator of
which is the number of the Senior Executive’s months of
participation during the calendar year through the date of
Change in Control and the denominator of which is 12.
In general, “Change in Control” means
• the individuals who are incumbent directors cease for any
reason to constitute a majority of the members of our Board
of Directors;
• the consummation of a merger of us or our affiliate with
another entity, unless the individuals and entities who were
the beneficial owners of our voting securities outstanding
immediately prior to such merger own, directly or indirectly,
at least 50% of the combined voting power of our voting
securities, the surviving entity or the parent of the surviving
entity outstanding immediately after such merger;
• any person, other than us, our affiliate or another specified
owner (as defined in the Change in Control Agreements),
becomes a beneficial owner, directly or indirectly, of our
securities representing 30% or more of the combined voting
power of our then outstanding voting securities;
• a sale, transfer, lease or other disposition of all or substan-
tially all of our assets (as defined in the Change in Control
Agreements) is consummated (an “asset sale”), unless (i) the
individuals and entities who were the beneficial owners of
our voting securities immediately prior to such asset sale
own, directly or indirectly, 50% or more of the combined
voting power of the voting securities of the entity that
acquires such assets in such asset sale or its parent immedi-
ately after such asset sale in substantially the same propor-
tions as their ownership of our voting securities immediately
prior to such asset sale or (ii) the individuals who comprise
our Board of Directors immediately prior to such asset sale
constitute a majority of the board of directors or other gov-
erning body of either the entity that acquired such assets in
such asset sale or its parent (or a majority plus one member
where such board or other governing body is comprised of
an odd number of directors); or
• our stockholders approve a plan of complete liquidation or
dissolution of us.
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 Com-
pany (or its successor) will pay severance benefits to a Senior
Executive if the Senior Executive’s employment is terminated
following, or in connection with, a Change in Control, unless:
(i) the Senior Executive resigns without good reason; (ii) the
Company terminated the employment of the Senior Executive
for cause; or (iii) the employment of the Senior Executive is
terminated by reason of death or disability.
If a Senior Executive meets the criteria for payment of
severance benefits due to termination of employment follow-
ing a Change of Control, he will receive the following benefits
in addition to the benefits described above under “Payments
in the Event of a Change in Control”:
• a lump-sum payment equal to three times the Senior
Executive’s highest base salary (as defined in the Change
of Control Agreement);
• a lump-sum payment equal to the Senior Executive’s earned
highest bonus amount (as defined in the Change of Control
Agreement), prorated based upon the number of days of his
service during the performance period (reduced by any pay-
ments received by the Senior Executive under the Company’s
Annual Incentive Compensation Plan, in connection 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);
• a lump-sum payment equal to three times the greater of
(i) the Senior Executive’s earned highest bonus amount
or (ii) the Senior Executive’s highest base salary multiplied
by the Senior Executive’s applicable multiple, which is 1.20;
0.80; 0.70; 0.75; and 0.70 for Messrs. Deaton, Ragauss;
Craighead; Crain and O’Donnell, respectively;
• continuation of accident and health insurance benefits for
an additional three years;
• a lump-sum payment equal to the sum of (i) the cost of the
Senior Executive’s perquisites in effect prior to his termina-
tion of employment for the remainder of the calendar year
and (ii) the cost of the Senior Executive’s perquisites in effect
prior to his termination of employment for an additional
three years;
• a lump-sum payment equal to the undiscounted value of
the benefits the Senior Executive would have received had
he continued to participate in the Thrift Plan, the Pension
Plan and the SRP for an additional three years, assuming
for this purpose that:
(1) the Senior Executive’s compensation during that three-
year period were his highest base salary and earned
highest bonus amount, and
(2) the Senior Executive’s contributions to and accruals
under those plans remained at the levels in effect as of
the date of the Change in Control or the date of termi-
nation, whichever is greater;
• eligibility for our retiree medical program if the Senior
Executive would have become entitled to participate in
that program had he remained employed for an additional
three years;(1)
• a lump-sum payment equivalent to 36 multiplied by the
monthly basic life insurance premium applicable to the
Senior Executive’s basic life insurance coverage on the date
of termination;
(1) The value of this benefit is the aggregate value of the medical coverage
utilizing the assumptions applied under FASB ASC Topic 715, Compensation-
Retirement Benefits.