Baker Hughes 2007 Annual Report Download - page 151

68 Baker Hughes Incorporated
Equity Compensation Plan Information
The information in the following table is presented as of December 31, 2007 with respect to shares of our common stock that
may be issued under our existing equity compensation plans, including the Baker Hughes Incorporated 1993 Stock Option Plan,
the Baker Hughes Incorporated Long-Term Incentive Plan and the Baker Hughes Incorporated 2002 Directors & Officers Long-Term
Incentive Plan, all of which have been approved by our stockholders.
(In millions of shares)
Number of Securities
Number of Securities to be Issued Weighted Average Remaining Available for Future
Upon Exercise of Outstanding Exercise Price of Outstanding Issuance Under Equity Compensation Plans
Equity Compensation Plan Category Options, Warrants and Rights Options, Warrants and Rights (excluding securities reflected in the first column)
Stockholder-approved plans
(excluding Employee Stock Purchase Plan) 1.2 $ 61.92 3.0
Nonstockholder-approved plans(1) 2.0 51.41 4.5
Subtotal (except for weighted average
exercise price) 3.2 55.28 7.5
Employee Stock Purchase Plan(2) – – 2.9
Total 3.2 – 10.4
(1) The table includes the following nonstockholder-approved plans: the 1998 Employee Stock Option Plan, the 2002 Employee Long-Term Incentive Plan and the Director
Compensation Deferral Plan. A description of each of these plans is set forth below.
(2) The per share purchase price under the Baker Hughes Incorporated Employee Stock Purchase Plan is determined in accordance with section 423 of the Code as 85%
of the lower of the fair market value of a share of our common stock on the date of grant or the date of purchase.
Our nonstockholder-approved plans are described below:
1998 Employee Stock Option Plan
The Baker Hughes Incorporated 1998 Employee Stock
Option Plan (the “1998 ESOP”) was adopted effective as of
October 1, 1998. The number of shares authorized for issu-
ance under the 1998 ESOP is 7.0 million shares. Nonqualified
stock options may be granted under the 1998 ESOP to our
employees. The exercise price of the options will be equal to
the fair market value per share of our common stock on the
date of grant, and option terms may be up to ten years. Under
the terms and conditions of the option award agreements for
options issued under the 1998 ESOP, options generally vest
and become exercisable in installments over the optionee’s
period of service, and the options vest on an accelerated basis
in the event of a change in control. As of December 31, 2007,
options covering approximately 0.2 million shares of our com-
mon stock were outstanding under the 1998 ESOP, options
covering approximately 0.1 million shares were exercised
during fiscal year 2007 and approximately 0.3 million shares
remained available for future options.
2002 Employee Long-Term Incentive Plan
The Baker Hughes Incorporated 2002 Employee Long-Term
Incentive Plan (the “2002 Employee LTIP”) was adopted effec-
tive as of March 6, 2002. The 2002 Employee LTIP permits the
grant of awards as nonqualified stock options, stock apprecia-
tion rights, restricted stock, restricted stock units, performance
shares, performance units, stock awards and cash-based awards
to our corporate officers and key employees. The number of
shares authorized for issuance under the 2002 Employee LTIP
is 9.5 million, with no more than 3.0 million available for grant
as awards other than options (the number of shares is subject
to adjustment for changes in our common stock).
The 2002 Employee LTIP is the companion plan to the
Baker Hughes Incorporated 2002 Director & Officer Long-Term
Incentive Plan, which was approved by our stockholders in
2002. The rationale for the two companion plans was to
discontinue the use of the remaining older option plans and
to have only two plans from which we would issue compensa-
tion awards.
Options. The exercise price of the options will not be less
than the fair market value of the shares of our common stock
on the date of grant, and options terms may be up to ten years.
The maximum number of shares of our common stock that
may be subject to options granted under the 2002 Employee
LTIP to any one employee during any one fiscal year will not
exceed 3.0 million, subject to adjustment under the antidilution
provisions of the 2002 Employee LTIP. Under the terms and
conditions of the stock option awards for options issued under
the 2002 Employee LTIP, options generally vest and become
exercisable in installments over the optionee’s period of service,
and the options vest on an accelerated basis in the event of a
change in control or certain terminations of employment. As
of December 31, 2007, options covering approximately 1.8 mil-
lion shares of our common stock were outstanding under the
2002 Employee LTIP, options covering approximately 0.9 mil-
lion shares were exercised during fiscal year 2007 and approxi-
mately 3.7 million shares remained available for future options.
Performance Shares and Units; Cash-Based Awards.
Performance shares may be granted to employees in the amounts
and upon the terms determined by the Compensation Com-
mittee of our Board of Directors, but must be limited to no
more than 1.0 million shares to any one employee in any one
fiscal year. Performance units and cash-based awards may be
granted to employees in amounts and upon the terms deter-
mined by the Compensation Committee, but must be limited
to no more than $10.0 million for any one employee in any