Baker Hughes 2007 Annual Report Download - page 27

2007 Proxy Statement 9
CHARITABLE CONTRIBUTIONS
During the fiscal year ended December 31, 2007, the
Company did not make any contributions to any charitable
organization in which an independent, non-management
director served as an executive officer, that exceeded the
greater of $1 million or 2% of the charitable organization’s
consolidated gross revenues.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934,
as amended (“Exchange Act”), requires executive officers,
directors and persons who beneficially own more than 10%
of the Common Stock to file initial reports of ownership and
reports of changes in ownership with the SEC and the NYSE.
SEC regulations require executive officers, directors and greater
than 10% beneficial owners to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of those forms
furnished to the Company and written representations from
the executive officers and directors, the Company believes its
executive officers and directors complied with all applicable
Section 16(a) filing requirements during the fiscal year ended
December 31, 2007.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board has adopted procedures for review and approval
or ratification of transactions with related persons. We subject
the following related persons to these procedures: directors,
director nominees, executive officers and any immediate family
members of these persons.
The Board annually re-evaluates the independence of any
related person for any transactions, arrangements or relation-
ships, or any series of similar transactions, arrangements or
relationships in which any director, director nominee, executive
officer or any immediate family member of those persons
could be a participant, the amount involved exceeds $120,000,
and in which any related person had or will have a direct or
indirect material interest.
COMPENSATION DISCUSSION AND ANALYSIS
Oversight of Executive Compensation Program
The Compensation Committee of our Board of Directors
(the “Compensation Committee”) oversees our compensation
programs and is charged with the review and approval of all
annual compensation decisions relating to our executives. Our
compensation programs include programs that are designed
specifically for (1) our most senior executives officers (“Senior
Executives”), which include the Principal Executive Officer
(“PEO”) and the other named executive officers in the Summary
Compensation Table (the “NEOs”); (2) employees who are
designated as executives of the Company (“Executives”),
which includes the Senior Executives and (3) a broad base
of Company employees.
No Compensation Committee member participates in any
of the Company’s employee compensation programs in order to
preserve their independence in making compensation decisions.
Each year we review any and all relationships that each director
serving on the Compensation Committee may have with us,
and the Board of Directors reviews our findings. The Board of
Directors has determined that none of the Compensation Com-
mittee members has any material business relationships with us.
Additionally, the Compensation Committee rotates members
to promote a non-biased approach to pay consideration and
the Company’s compensation polices and procedures.
The responsibilities of the Compensation Committee
related to compensation decisions and policies include, among
others, annually (i) reviewing and approving the Company’s
general compensation strategies and objectives; (ii) reviewing
and approving the Company’s goals and objectives relevant to
the PEO’s compensation, evaluating the PEO’s performance in
light of such goals and objectives, and determining the PEO’s
compensation level based on this evaluation and other rele-
vant information; (iii) reviewing and approving the individual
elements of total compensation for the Senior Executives;
(iv) reviewing with the PEO and the Board matters relating
to management succession, including compensation related
issues, as well as maintaining and reviewing a list of potential
successors to the PEO; (v) making recommendations to the
Board regarding all employment agreements, severance agree-
ments, change in control provisions and agreements and any
special supplemental benefits applicable to the Executives;
(vi) assuring that the Company’s incentive compensation pro-
gram, including the annual and long-term incentive plans,
is administered in a manner consistent with the Company’s
compensation strategy in regards to participation, target
awards, financial goals and actual awards paid to Senior Exec-
utives; (vii) approving and/or recommending to the Board new
incentive compensation plans and equity-based compensation
plans, and submitting for stockholder approval where appro-
priate; (viii) approving revisions to annual salary increases for
the Senior Executives and reviewing compensation arrange-
ments of the Senior Executives; (ix) reviewing and reporting
to the Board the levels of stock ownership by the Senior
Executives in accordance with the Stock Ownership Policy;
(xi) reviewing the Company’s employee benefit programs
and recommending for approval all committee administrative
changes that may be subject to the approval of the stockholders
or the Board; and (xii) producing an annual compensation
committee report for inclusion in the Company’s Proxy State-
ment in accordance with applicable rules and regulations.