Baker Hughes 2007 Annual Report Download - page 23

2007 Proxy Statement 5
It is the policy of the Board of Directors that any nominee
for director who receives a “withhold” vote representing a
majority of the votes cast for his or her election would be
required to submit a letter of resignation to the Board’s Gover-
nance Committee. The Governance Committee would recom-
mend to the Board whether or not the resignation should be
accepted. Pursuant to the Company’s Bylaws, in case of a
vacancy on the Board of Directors, a majority of the remaining
directors will appoint a successor, and the director so appointed
will hold office until the next annual meeting or until his or
her successor is elected and qualified or until his or her earlier
death, retirement, resignation or removal.
CORPORATE GOVERNANCE
The Company’s Board of Directors believes the purpose
of corporate governance is to maximize stockholder value in
a manner consistent with legal requirements and the highest
standards of integrity. The Board has adopted and adheres
to corporate governance practices, which practices the Board
and management believe promote this purpose, are sound
and represent best practices. The Board continually reviews
these governance practices, Delaware law (the state in which
the Company is incorporated), the rules and listing standards
of the NYSE and SEC regulations, as well as best practices
suggested by recognized governance authorities. The Board
has established the Company’s Corporate Governance Guide-
lines (“Governance Guidelines”) as the principles of conduct
of the Company’s business affairs to benefit its stockholders,
which guidelines conform to the NYSE corporate governance
listing standards and SEC rules. 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.
Board of Directors
During the fiscal year ended December 31, 2007, the
Board of Directors held seven meetings, and each director
attended more than 75% of the total number of meetings
of the Company’s Board of Directors and of the respective
Committees on which he or she served. During fiscal year
2007, each independent non-management director was paid
an annual retainer of $60,000. The Audit/Ethics Committee
Chairman received an additional annual retainer of $20,000.
Each of the other independent non-management Committee
Chairmen received an additional annual retainer of $15,000.
Each of the members of the Audit/Ethics Committee, exclud-
ing the Chairman, received an additional annual retainer of
$10,000. Each of the members, excluding the Chairmen, of
the Compensation, Finance and Governance Committees
received an additional annual retainer of $5,000. Each inde-
pendent non-management director also received annual non-
retainer equity in a total amount of $150,000, in the form
of (i) restricted shares of the Company’s Common Stock with
a value of $100,000 issued in January of each year that gener-
ally will vest one-third on the annual anniversary date of the
award (however, the restricted shares, to the extent not previ-
ously vested or forfeited, will become fully vested on the
annual meeting of stockholders next following the date the
independent non-management director attains the age of 72);
and (ii) options to acquire the Company’s Common Stock with
a value of $25,000 issued in each of January and July. The
options will vest one-third each year beginning on the first anni-
versary date of the grant of the option. The Company previously
provided benefits under a Directors Retirement Plan, which Plan
remains in effect until all benefits accrued thereunder are paid
in accordance with the current terms and conditions of that
Plan. No additional benefits have been accrued under the Plan
since December 31, 2001.
Director Independence
All members of the Board of Directors, other than the
Chairman, President and Chief Executive Officer, Mr. Deaton,
satisfy the independence requirements of the NYSE. In addi-
tion, the Board has adopted a “Policy for Director Indepen-
dence, Audit/Ethics Committee Members and Audit Committee
Financial Expert” included as Exhibit C to the Governance
Guidelines and attached as Annex A to this Proxy Statement.
Such Policy supplements the NYSE independence requirements.
Directors who meet these independence standards are consid-
ered to be “independent” as defined therein. The Board has
determined that all the nominees for election at this Annual
Meeting, other than Mr. Deaton, meet these standards.
Regularly Scheduled Executive Sessions
of Non-Management Directors
Pursuant to the Governance Guidelines, executive sessions
of independent non-management directors are held at every
regularly scheduled meeting of the Board of Directors. The
Governance Committee reviews and recommends to the Board
a director to serve as Lead Director during executive sessions.
Currently, Mr. Riley serves as the Lead Director during the
executive sessions of independent non-management directors.
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, Compensation
and Governance Committees are comprised solely of indepen-
dent non-management 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.