Baker Hughes 2007 Annual Report Download - page 49

2007 Proxy Statement 31
parachute” rules on payments and benefits received in con-
nection with the Change in Control. The gross-up payment
would make the officer whole for excise taxes (and for all
taxes on the gross-up payment) in respect of payments
and benefits received pursuant to all the Company’s plans,
agreements and arrangements (including for example,
acceleration of vesting of equity awards).
We (or our successor) must also reimburse the NEO for
any legal fees and expenses incurred by him (i) in disputing
in good faith any issue relating to his termination of employment,
(ii) in seeking in good faith to enforce the Change in Control
Agreement or (iii) in connection with any tax audit or proceed-
ing relating to the application of parachute payment excise
taxes to any payment or benefit under the Change in Control
Agreement.
If the NEO’s employment were to have been terminated
by him for Good Reason or by us (or our successor) without
Cause in connection with a Change of Control on December 31,
2007, and a Change of Control were to have occurred on that
date, we estimate that the value of the payments and benefits
described in clauses (a) through (j) above that he would have
been eligible to receive is as follows:
Baker Hughes Incorporated Executive Severance Plan
On November 1, 2002, we adopted an executive sever-
ance program, the Baker Hughes Incorporated Executive Sever-
ance Plan (the “Executive Severance Plan”) for our executives
who are classified by us as United States executive salary grade
system employees, including the NEOs. The Executive Sever-
ance Plan provides for payment of certain benefits to each of
these executives as a result of an involuntary termination of
employment provided that (i) the executive signs a release
agreement substantially similar to the form of release agree-
ment set forth in the Executive Severance Plans, (ii) during the
two-year period commencing on the executive’s date of termi-
nation of employment he complies with the noncompetition
and nonsolicitation agreements contained in the Executive
Severance Plan and (iii) the executive does not disclose our
confidential information. Any amounts payable under the
Executive Severance Plan are reduced by the amount of any
severance payments payable to the NEO by us under any other
plan, program or individual contractual arrangement.
Payments in the Event of a Termination of Employment
by the Executive for Good Reason or by the Company
or its Successor Without Cause
We (or our successor) will pay severance benefits to a
NEO if he incurs an Involuntary Termination. “Involuntary
Termination” means the complete severance of a NEO’s
employment relationship with us: (i) because his position is
eliminated; (ii) because he and we agree to his resignation
of his position at our request; (iii) which occurs in conjunction
with, and during the period that begins 90 days before and
ends 180 days after, an acquisition, merger, spin-off, reorgani-
zation (either business or personnel), facility closing or discon-
tinuance of the operations of the divisions in which he is
employed; or (iv) for any other reason which is deemed an
Involuntary Termination by us.
An Involuntary Termination does not include: (i) a termina-
tion for cause; (ii) a transfer of employment among us and our
affiliates; (iii) a temporary absence, such as a Family and Medi-
cal Leave Act leave or a temporary layoff in which the NEO
retains entitlement to re-employment; (iv) the NEO’s death,
disability or Retirement (as defined in the Executive Severance
Plan); or (v) a voluntary termination by the employee.
Payment or Benefit Chad C. Deaton Peter A. Ragauss James R. Clark Alan R. Crain David H. Barr
Clause (a) $ 3,300,000 $ 1,638,000 $ 2,085,000 $ 1,365,000 $ 1,350,000
Clause (b) $ 1,100,000 $ 354,900 $ 556,000 $ 295,750 $ 315,000
Clause (c) $ 3,300,000 $ 1,064,700 $ 1,668,000 $ 887,250 $ 945,000
Clause (d) $ 44,235 $ 55,618 $ 43,371 $ 55,618 $ 43,771
Clause (e) $ 75,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
Clause (f) $ 891,000 $ 351,351 $ 508,801 $ 304,054 $ 314,773
Clause (g) $ 0 $ 0 $ 0 $ 13,181 $ 140,666
Clause (h) $ 11,952 $ 6,275 $ 7,709 $ 5,080 $ 4,709
Clause (i) $ 30,000 $ 30,000 $ 30,000 $ 30,000 $ 30,000
Clause (j) $ 5,770,271 $ 2,465,787 $ 2,874,286 $ 1,398,768 $ 1,267,911
Accelerated exercisability of stock options5 $ 2,567,850 $ 318,959 $ 1,049,346 $ 499,549 $ 354,545
Accelerated vesting of restricted
stock awards5 $ 8,135,709 $ 3,171,740 $ 4,445,334 $ 3,080,259 $ 2,560,003
Payment in settlement of performance
awards under the 2002 D&O Plan5 $ 2,645,540 $ 0 $ 1,237,430 $ 426,700 $ 277,355
Total $ 27,871,557 $ 9,508,330 $ 14,565,677 $ 8,421,209 $ 7,663,733
5 This benefit is discussed in detail above under the heading “Payments in the Event of a Change in Control Absent a Termination of Employment”.