Baker Hughes 2007 Annual Report Download - page 159

76 Baker Hughes Incorporated
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
Corporate Governance Guidelines can be accessed elec-
tronically at www.bakerhughes.com in the “About Baker
Hughes” section.
The Baker Hughes board consists of 12 directors, including
11 independent non-management directors. The company’s
bylaws allow the board to have between 9 and 12 members.
Expansion above 12 members requires an affirmative vote of
75% of the members of the board. The sole inside director
is Chad C. Deaton, Chairman of the Board, President and
Chief Executive Officer of Baker Hughes. Director H. John Riley
serves as the Lead Director.
Directors are elected annually. Independent non-management
directors cannot stand for re-election at the annual meeting of
stockholders following their 72nd birthday, and must resign 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.
In addition, any nominee for director who receives a “with-
hold” vote representing a majority of the votes cast for his or
her election is required to submit a letter of resignation to the
Board’s Governance Committee. The Governance Committee
would recommend to the Board whether or not the resigna-
tion should be accepted.
Baker Hughes Directors At A Glance
•฀ All฀11฀independent฀non-management฀directors฀serve฀on฀
no more than three other public boards.
•฀ The฀average฀age฀of฀the฀directors฀is฀64.฀The฀average฀tenure฀
on the board is approximately seven years.
•฀ The฀diversity฀of฀principal฀occupations฀represented฀on฀our฀
board includes Diplomacy (Djerejian), Diversified Industrial
and Manufacturing (Fernandes and Riley), Energy (Cazalot,
Jungels, Nichols and Watson), Executive Search (Gargalli),
Finance (McCall), High Technology (Lash), Industrial Tech-
nologies (Brady) and Oilfield Services (Deaton).
•฀ The฀board฀has฀five฀meetings฀scheduled฀in฀2008.
•฀ In฀2007,฀the฀board฀held฀seven฀meetings฀and฀all฀directors฀
attended at least 75% of all committee and board meetings.
•฀ All฀six฀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 independent non-
management directors.
•฀ The฀board฀conducts฀continuing฀director฀education฀and฀
director orientation.
Committees of the Board
The board has five standing committees – Audit/Ethics,
Compensation, Finance, Governance and Executive. The Audit/
Ethics, Compensation and Governance Committees are com-
prised solely of independent non-management directors in
accordance with NYSE corporate governance listing standards.
The Finance Committee is also comprised of independent non-
management directors. Additionally, the board has 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 in the “About Baker
Hughes” section of our website at www.bakerhughes.com.
The Audit/Ethics Committee met nine times in 2007. The
Compensation Committee met four times in 2007. The Finance
Committee met twice in 2007. The Governance Committee
met four times in 2007. The Executive Committee met once in
2007. Independent non-management directors meet without
the CEO on a regular basis.
The Audit/Ethics Committee is comprised of six indepen-
dent non-management directors and is responsible for assist-
ing 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
registered public accounting firm and the performance of our
internal audit function.
The Committee:
•฀ selects฀the฀independent฀registered฀public฀accounting฀firm฀
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 provided
to analysts;
•฀ meets฀periodically฀with฀management,฀the฀internal฀auditors฀
and the independent registered public accounting firm to
review the work of each. The independent registered public
accounting firm 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 Certifications are available on our website;
•฀ prepares฀an฀annual฀report฀to฀stockholders฀which฀is฀published฀
in our proxy statement (contained herein) and made available
on our website.