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IV.฀Definitions
An฀“immediate฀family฀member”฀includes฀a฀person’s฀
spouse,฀parents,฀children,฀siblings,฀mothers฀and฀fathers-in-law,฀
sons฀and฀daughters-in-law,฀brothers฀and฀sisters-in-law,฀and฀
anyone฀(other฀than฀domestic฀employees)฀who฀shares฀such฀per-
son’s฀household.฀When฀considering฀the฀application฀of฀the฀
three฀year฀period฀referred฀to฀in฀each฀of฀paragraphs฀II.1฀
through฀II.5฀above,฀the฀Company฀need฀not฀consider฀individuals฀
who฀are฀no฀longer฀immediate฀family฀members฀as฀a฀result฀of฀
legal฀separation฀or฀divorce,฀or฀those฀who฀have฀died฀or฀become฀
incapacitated.
The฀“Company”฀includes฀any฀subsidiary฀in฀a฀consolidated฀
group฀with฀the฀Company.
AUDIT/ETHICS฀COMMITTEE฀FINANCIAL฀฀
EXPERT฀QUALIFICATIONS
The฀Company฀believes฀that฀it฀is฀desirable฀that฀one฀or฀more฀
members฀of฀the฀Audit/Ethics฀Committee฀possess฀such฀qualities฀
and฀skills฀such฀that฀they฀qualify฀as฀an฀Audit฀Committee฀Finan-
cial฀Expert฀as฀defined฀by฀the฀Securities฀and฀Exchange฀Commis-
sion฀(“SEC”).
1.฀ The฀SEC฀rules฀define฀an฀Audit฀Committee฀Financial฀Expert฀
as฀a฀director฀who฀has฀the฀following฀attributes:
(a)฀ An฀understanding฀of฀generally฀accepted฀accounting฀
principles฀and฀financial฀statements;
(b)฀ The฀ability฀to฀assess฀the฀general฀application฀of฀such฀
principles฀in฀connection฀with฀the฀accounting฀for฀esti-
mates,฀accruals฀and฀reserves;
(c)฀ Experience฀preparing,฀auditing,฀analyzing฀or฀evaluating฀
financial฀statements฀that฀present฀a฀breadth฀and฀level฀
of฀complexity฀of฀accounting฀issues฀that฀are฀generally฀
comparable฀to฀the฀breadth฀and฀complexity฀of฀issues฀
that฀can฀reasonably฀be฀expected฀to฀be฀raised฀by฀
the฀registrant’s฀financial฀statements,฀or฀experience฀
actively฀supervising฀one฀or฀more฀persons฀engaged฀
in฀such฀activities;
(d)฀ An฀understanding฀of฀internal฀controls฀and฀procedures฀
for฀financial฀reporting;฀and
(e)฀ An฀understanding฀of฀audit฀committee฀functions.
2.฀ Under฀SEC฀rules,฀a฀director฀must฀have฀acquired฀such฀attri-
butes฀through฀any฀one฀or฀more฀of฀the฀following:
(a)฀ Education฀and฀experience฀as฀a฀principal฀financial฀officer,฀
principal฀accounting฀officer,฀controller,฀public฀accoun-
tant฀or฀auditor฀or฀experience฀in฀one฀or฀more฀positions฀
that฀involve฀the฀performance฀of฀similar฀functions;
(b)฀ Experience฀actively฀supervising฀a฀principal฀financial฀officer,฀
principal฀accounting฀officer,฀controller,฀public฀accountant,฀
auditor฀or฀person฀performing฀similar฀functions;
(c)฀ Experience฀overseeing฀or฀assessing฀the฀performance฀
of฀companies฀or฀public฀accountants฀with฀respect฀to฀
the฀preparation,฀auditing฀or฀evaluation฀of฀financial฀
statements;฀or
(d)฀ Other฀relevant฀experience.
1฀ In฀applying฀this฀test,฀both฀the฀payments฀and฀the฀consolidated฀gross฀revenues฀
to฀be฀measured฀shall฀be฀those฀reported฀in฀the฀last฀completed฀fiscal฀year.฀The฀
look-back฀provision฀for฀this฀test฀applies฀solely฀to฀the฀financial฀relationship฀
between฀the฀Company฀and฀the฀director฀or฀immediate฀family฀member’s฀cur-
rent฀employer;฀the฀Company฀need฀to฀consider฀former฀employment฀of฀the฀
director฀or฀immediate฀family฀member.฀Charitable฀organizations฀shall฀not฀be฀
considered฀“companies”฀for฀purposes฀of฀this฀test฀provided฀however฀that฀the฀
company฀shall฀disclose฀in฀its฀annual฀proxy฀statement฀any฀charitable฀contribu-
tions฀made฀by฀the฀Company฀to฀any฀charitable฀organization฀in฀which฀a฀direc-
tor฀serves฀as฀an฀executive฀officer฀if,฀within฀the฀preceding฀three฀years,฀
contributions฀in฀any฀single฀fiscal฀year฀exceeded฀the฀greater฀of฀$1฀million,฀
or฀2%฀of฀such฀charitable฀organization’s฀consolidated฀gross฀revenues.
A-2฀฀฀฀Baker฀Hughes฀Incorporated