Baker Hughes 2004 Annual Report Download - page 23

Committees฀of฀the฀Board
The฀Board฀of฀Directors฀has,฀in฀addition฀to฀other฀commit-
tees,฀an฀Audit/Ethics฀Committee,฀a฀Compensation฀Committee฀
and฀a฀Governance฀Committee.฀The฀Audit/Ethics฀Committee,฀
Compensation฀Committee฀and฀Governance฀Committees฀are฀
comprised฀solely฀of฀independent฀directors฀in฀accordance฀with฀
NYSE฀corporate฀governance฀listing฀standards.฀The฀Board฀of฀
Directors฀adopted฀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฀under฀the฀
“About฀Baker฀Hughes”฀section฀of฀the฀Company’s฀website฀at฀
www.bakerhughes.com฀and฀are฀also฀available฀upon฀request฀
to฀the฀Company’s฀Corporate฀Secretary.
Audit/Ethics฀Committee.฀The฀Audit/Ethics฀Committee,฀
which฀is฀comprised฀of฀Messrs.฀McCall฀(Chairman),฀Cazalot,฀
Fernandes,฀Lash฀and฀Nichols,฀held฀11฀meetings฀during฀fiscal฀
year฀2004.฀The฀Board฀of฀Directors฀has฀determined฀that฀the฀
Audit/Ethics฀Committee฀members฀meet฀the฀NYSE฀standards฀
for฀independence฀and฀the฀Company’s฀“Policy฀for฀Director฀Inde-
pendence,฀Audit/Ethics฀Committee฀Members฀and฀Audit฀Com-
mittee฀Financial฀Expert.”฀The฀Audit/Ethics฀Committee฀Charter฀
is฀attached฀as฀Annex฀B฀to฀this฀Proxy฀Statement฀and฀can฀be฀
accessed฀electronically฀under฀the฀“About฀Baker฀Hughes”฀sec-
tion฀of฀the฀Company’s฀website฀at฀www.bakerhughes.com.฀The฀
General฀Auditor฀and฀the฀Corporate฀internal฀audit฀function฀
report฀directly฀to฀the฀Audit/Ethics฀Committee.฀The฀Company’s฀
Corporate฀Audit฀Department฀sends฀written฀reports฀quarterly฀
to฀the฀Audit/Ethics฀Committee฀on฀its฀audit฀findings฀and฀the฀
status฀of฀its฀internal฀audit฀projects.฀The฀Audit/Ethics฀Commit-
tee฀provides฀assistance฀to฀the฀Board฀of฀Directors฀in฀overseeing฀
matters฀relating฀to฀the฀accounting฀and฀reporting฀practices฀of฀
the฀Company,฀the฀adequacy฀of฀the฀Company’s฀disclosure฀con-
trols฀and฀internal฀controls,฀the฀quality฀and฀integrity฀of฀the฀
quarterly฀and฀annual฀financial฀statements฀of฀the฀Company,฀
the฀performance฀of฀the฀Company’s฀internal฀audit฀function,฀
the฀review฀and฀pre-approval฀of฀the฀current฀year฀audit฀and฀฀
non-audit฀fees฀and฀the฀Company’s฀risk฀analysis฀and฀risk฀man-
agement฀procedures.฀In฀addition,฀the฀Audit/Ethics฀Committee฀
oversees฀the฀Company’s฀compliance฀programs฀relating฀to฀legal฀
and฀regulatory฀requirements.฀The฀Audit/Ethics฀Committee฀has฀
developed฀“Procedures฀for฀the฀Receipt,฀Retention฀and฀Treat-
ment฀of฀Complaints”฀to฀address฀complaints฀received฀by฀the฀
Company฀regarding฀accounting,฀internal฀controls฀or฀auditing฀
matters.฀Such฀procedures฀are฀included฀as฀Exhibit฀F฀to฀the฀
Governance฀Guidelines.฀The฀Governance฀Guidelines฀are฀posted฀
under฀the฀“About฀Baker฀Hughes”฀section฀of฀the฀Company’s฀
website฀at฀www.bakerhughes.com฀and฀are฀also฀available฀upon฀
request฀to฀the฀Company’s฀Corporate฀Secretary.
The฀Audit/Ethics฀Committee฀also฀is฀responsible฀for฀the฀
selection฀and฀hiring฀of฀the฀Company’s฀independent฀auditor.฀
To฀promote฀independence฀of฀the฀audit,฀the฀Committee฀con-
sults฀separately฀and฀jointly฀with฀the฀independent฀auditor,฀
the฀internal฀auditors฀and฀management.฀
The฀Board฀has฀reviewed฀the฀experience฀of฀the฀members฀
of฀the฀Audit/Ethics฀Committee฀and฀has฀found฀that฀all฀five฀
members฀of฀the฀Committee฀meet฀the฀qualifications฀to฀be฀an฀
“audit฀committee฀financial฀expert”฀under฀the฀SEC฀rules฀issued฀
pursuant฀to฀SOX.฀In฀addition,฀the฀Board฀has฀designated฀
Anthony฀G.฀Fernandes฀as฀the฀member฀of฀the฀Committee฀
who฀serves฀as฀the฀“audit฀committee฀financial฀expert”฀of฀the฀
Company’s฀Audit/Ethics฀Committee.฀
Compensation฀Committee.฀The฀Compensation฀Com-
mittee,฀which฀is฀comprised฀of฀Messrs.฀Riley฀(Chairman),฀Brady,฀
Djerejian,฀Watson฀and฀Ms.฀Gargalli,฀held฀seven฀meetings฀dur-
ing฀fiscal฀year฀2004.฀The฀Board฀of฀Directors฀has฀determined฀
that฀the฀Compensation฀Committee฀members฀meet฀the฀NYSE฀
standards฀for฀independence฀and฀the฀Company’s฀“Policy฀for฀
Director฀Independence,฀Audit/Ethics฀Committee฀Members฀
and฀Audit฀Committee฀Financial฀Expert.”฀The฀Compensation฀
Committee฀Charter฀can฀be฀accessed฀electronically฀under฀the฀
“About฀Baker฀Hughes”฀section฀of฀the฀Company’s฀website฀at฀
www.bakerhughes.com.฀The฀functions฀performed฀by฀the฀Com-
pensation฀Committee฀include฀reviewing฀and฀approving฀Baker฀
Hughes’฀executive฀salary฀and฀bonus฀structure;฀reviewing฀Baker฀
Hughes’฀stock฀option฀plans฀(and฀making฀grants฀thereunder),฀
employee฀retirement฀income฀plans,฀the฀employee฀thrift฀plan฀and฀
the฀employee฀stock฀purchase฀plan;฀setting฀bonus฀goals;฀approv-
ing฀salary฀and฀bonus฀awards฀to฀key฀executives;฀recommending฀
incentive฀compensation฀and฀stock฀award฀plans฀for฀approval฀by฀
stockholders;฀and฀reviewing฀management฀succession฀plans.
Governance฀Committee.฀The฀Governance฀Committee,฀
which฀is฀comprised฀of฀Messrs.฀Cazalot฀(Chairman),฀Djerejian,฀
McCall,฀Riley฀and฀Watson,฀held฀four฀meetings฀during฀fiscal฀
year฀2004.฀The฀Board฀of฀Directors฀has฀determined฀that฀the฀
Governance฀Committee฀members฀meet฀the฀NYSE฀standards฀
for฀independence฀and฀the฀Company’s฀“Policy฀for฀Director฀
Independence,฀Audit/Ethics฀Committee฀Members฀and฀Audit฀
Committee฀Financial฀Expert.”฀A฀current฀copy฀of฀the฀Gover-
nance฀Committee฀Charter฀can฀be฀accessed฀electronically฀under฀
the฀“About฀Baker฀Hughes”฀section฀of฀the฀Company’s฀website฀
at฀www.bakerhughes.com.฀The฀functions฀performed฀by฀the฀
Governance฀Committee฀include฀overseeing฀the฀Company’s฀cor-
porate฀governance฀affairs฀and฀monitoring฀compliance฀with฀the฀
Governance฀Guidelines.฀In฀addition,฀the฀Governance฀Committee฀
nominates฀candidates฀for฀the฀Board฀of฀Directors,฀selects฀candi-
dates฀to฀fill฀vacancies฀on฀the฀Board,฀reviews฀the฀structure฀and฀
composition฀of฀the฀Board,฀considers฀the฀qualifications฀required฀
for฀continuing฀Board฀service฀and฀recommends฀directors’฀fees.฀
Proxy฀Statement฀฀฀฀฀7