Baker Hughes 2004 Annual Report Download - page 124

GOVERNANCE฀AT฀BAKER฀HUGHES
Baker฀Hughes฀Corporate฀Governance฀Guidelines฀–฀
Our฀board’s฀Corporate฀Governance฀Guidelines฀regulate฀its฀
relationship฀with฀stockholders,฀the฀conduct฀of฀the฀company’s฀
affairs฀and฀its฀relationship฀with฀our฀senior฀executive฀manage-
ment.฀The฀guidelines฀recognize฀that฀the฀board฀has฀a฀separate฀
and฀unique฀role฀as฀the฀link฀in฀the฀chain฀of฀authority฀between฀
the฀stockholders฀and฀senior฀executive฀management.฀The฀Cor-
porate฀Governance฀Guidelines฀can฀be฀accessed฀electronically฀at฀
www.bakerhughes.com฀in฀the฀“About฀Baker฀Hughes”฀section.
The฀Baker฀Hughes฀board฀consists฀of฀11฀directors,฀including฀
10฀independent฀non-employee฀directors.฀The฀company’s฀bylaws฀
allow฀the฀board฀to฀have฀between฀9฀and฀12฀members.฀Expan-
sion฀above฀12฀members฀requires฀an฀affirmative฀vote฀of฀75%฀of฀
the฀members฀of฀the฀board.฀The฀sole฀inside฀director฀is฀Chad฀C.฀
Deaton,฀Chairman฀and฀Chief฀Executive฀Officer฀of฀Baker฀
Hughes.฀Director฀H.฀John฀Riley฀serves฀as฀the฀Lead฀Director.
The฀board฀currently฀has฀three฀classes฀of฀directors฀serving฀
three-year฀staggered฀terms.฀At฀the฀2005฀Annual฀Meeting฀of฀
Stockholders,฀the฀board฀is฀proposing฀to฀amend฀the฀company’s฀
charter฀and฀bylaws฀to฀eliminate฀the฀classification฀of฀the฀board฀
and฀provide฀for฀the฀annual฀selection฀of฀all฀directors.฀Non-
employee฀directors฀must฀resign฀as฀a฀director฀following฀certain฀
events,฀including฀their฀72nd฀birthday,฀the฀third฀anniversary฀of฀
the฀director’s฀retirement฀from฀their฀principal฀occupation,฀the฀
first฀anniversary฀of฀a฀job฀change฀other฀than฀a฀promotion฀or฀a฀
lateral฀move฀within฀the฀same฀organization฀or฀if฀attendance฀at฀
board฀and฀committee฀meetings฀falls฀below฀66%.฀The฀board฀
may฀waive฀these฀requirements฀if฀it฀believes฀retention฀of฀the฀
board฀member฀is฀in฀the฀best฀interest฀of฀our฀company.
Baker฀Hughes฀Directors฀At฀A฀Glance
•฀ All฀10฀non-employee฀independent฀directors฀serve฀on฀no฀
more฀than฀three฀other฀public฀boards.
•฀ The฀average฀age฀of฀the฀directors฀is฀61.฀The฀average฀tenure฀
on฀the฀board฀is฀approximately฀four฀and฀one-half฀years.
•฀ The฀diversity฀of฀principal฀occupations฀represented฀on฀our฀
board฀includes฀Diplomacy฀(Djerejian),฀Diversified฀Industrial฀
and฀Manufacturing฀(Fernandes฀and฀Riley),฀Energy฀(Cazalot,฀
Nichols฀and฀Watson),฀Executive฀Search฀(Gargalli),฀Finance฀
(McCall),฀High฀Technology฀(Lash),฀Industrial฀Technologies฀
(Brady)฀and฀Oilfield฀Services฀(Deaton).
•฀ Beginning฀in฀2005,฀the฀board฀has฀regularly฀scheduled฀
meetings฀five฀times฀per฀year.฀
•฀ In฀2004,฀the฀board฀held฀nine฀meetings฀and฀all฀directors฀
attended฀at฀least฀75%฀of฀all฀committee฀and฀board฀meet-
ings฀except฀for฀Messrs.฀Cazalot฀and฀Nichols฀who฀attended฀
70%฀of฀all฀meetings.
•฀ All฀five฀members฀of฀the฀Audit/Ethics฀Committee฀meet฀the฀
SEC฀requirements฀of฀an฀“audit฀committee฀financial฀expert.”฀
The฀board฀has฀named฀Anthony฀G.฀Fernandes฀as฀its฀finan-
cial฀expert.฀
•฀ The฀Audit/Ethics,฀Compensation,฀Finance฀and฀Governance฀
Committees฀are฀all฀comprised฀solely฀of฀non-employee฀inde-
pendent฀directors.
•฀ The฀board฀conducts฀continuing฀director฀education฀and฀
director฀orientation.
Committees฀of฀the฀Board฀–฀The฀board฀has฀five฀standing฀
committees฀–฀Audit/Ethics,฀Compensation,฀Finance,฀Gover-
nance฀and฀Executive.฀The฀Audit/Ethics,฀Compensation฀and฀
Governance฀Committees฀are฀comprised฀solely฀of฀independent฀
directors฀in฀accordance฀with฀NYSE฀corporate฀governance฀listing฀
standards.฀The฀Finance฀Committee฀is฀also฀comprised฀of฀inde-
pendent฀directors.฀Additionally,฀the฀board฀has฀adopted฀revised฀
charters฀for฀the฀Audit/Ethics,฀Compensation฀and฀Governance฀
Committees฀that฀comply฀with฀the฀requirements฀of฀the฀NYSE฀
standards,฀applicable฀provisions฀of฀the฀Sarbanes-Oxley฀Act฀of฀
2002฀(“SOX”)฀and฀SEC฀rules.฀Each฀of฀the฀charters฀has฀been฀
posted฀and฀is฀available฀for฀public฀viewing฀in฀the฀“About฀Baker฀
Hughes”฀section฀of฀our฀website฀at฀www.bakerhughes.com.฀The฀
Audit/Ethics฀Committee฀meets฀at฀least฀10฀times฀per฀year.฀The฀
Compensation฀Committee฀meets฀at฀least฀four฀times฀per฀year.฀
The฀Finance฀and฀Governance฀Committees฀meet฀at฀least฀two฀
times฀per฀year.฀The฀Executive฀Committee฀meets฀as฀required.฀
Non-employee฀independent฀directors฀meet฀without฀the฀CEO฀
on฀a฀regular฀basis.
The฀Audit/Ethics฀Committee฀is฀comprised฀of฀five฀non-
employee฀independent฀directors฀and฀is฀responsible฀for฀assisting฀
the฀board฀with฀the฀oversight฀of฀the฀integrity฀of฀our฀financial฀
statements,฀our฀compliance฀with฀legal฀and฀regulatory฀require-
ments,฀the฀qualification฀and฀independence฀of฀our฀independent฀
auditor฀and฀the฀performance฀of฀our฀internal฀audit฀function.฀
The฀Committee:
•฀ selects฀the฀independent฀auditor฀used฀by฀the฀company฀฀
and฀reviews฀their฀performance;
•฀ reviews฀financial฀reporting฀and฀disclosure฀issues฀with฀฀
management฀and฀the฀internal฀auditors;
•฀ establishes฀guidelines฀with฀respect฀to฀earnings฀news฀releases฀
and฀the฀financial฀information฀and฀earnings฀guidance฀pro-
vided฀to฀analysts;
•฀ meets฀periodically฀with฀management,฀the฀internal฀auditors฀
and฀the฀independent฀auditor฀to฀review฀the฀work฀of฀each.฀
The฀independent฀auditor฀and฀internal฀auditors฀have฀full฀
and฀free฀access฀to฀the฀Audit/Ethics฀Committee,฀without฀
management฀present,฀to฀discuss฀auditing฀and฀financial฀
reporting฀matters;
•฀ reviews฀and฀pre-approves฀audit฀and฀non-audit฀fees;
•฀ provides฀assistance฀to฀the฀board฀in฀overseeing฀matters฀
related฀to฀risk฀analysis฀and฀risk฀management;
•฀ annually฀reviews฀compliance฀with฀our฀Business฀Code฀of฀
Conduct฀and฀Foreign฀Corrupt฀Practices฀Act฀policies.฀The฀
Baker฀Hughes฀Business฀Code฀of฀Conduct฀and฀Code฀of฀฀
Ethical฀Conduct฀Certification฀are฀available฀on฀our฀website;
•฀ annually฀reviews฀compliance฀with฀our฀environmental฀policy.฀
The฀Baker฀Hughes฀Environmental฀Policy฀is฀available฀on฀
our฀website;
•฀ prepares฀an฀annual฀report฀to฀stockholders฀which฀is฀pub-
lished฀in฀our฀proxy฀statement฀(contained฀herein)฀and฀made฀
available฀on฀our฀website.
74฀฀฀฀฀Baker฀Hughes฀Incorporated