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2007 Proxy Statement E-1
ANNEX E
BAKER HUGHES INCORPORATED
2002 DIRECTOR & OFFICER LONG-TERM INCENTIVE PLAN
(Effective as of March 6, 2002)
TABLE OF CONTENTS
Article 1. Establishment, Objectives and Duration E-1
Article 2. Definitions and Construction E-1
Article 3. Administration E-4
Article 4. Shares Subject to Plan and Maximum Awards E-5
Article 5. Eligibility and Participation E-6
Article 6. Stock Options E-6
Article 7. Stock Appreciation Rights E-8
Article 8. Restricted Stock and Restricted Stock Units E-8
Article 9. Performance Units, Performance Shares
and Cash-Based Awards; Stock Awards E-9
Article 10. Performance Measures E-10
Article 11. Beneficiary Designation E-10
Article 12. Deferrals E-10
Article 13. Rights of Employees/Directors E-10
Article 14. Acceleration E-10
Article 15. Amendment, Modification,
Suspension and Termination E-11
Article 16. Withholding E-11
Article 17. Successors E-11
Article 18. General Provisions E-11
Article 1. Establishment, Objectives and Duration.
1.1 Establishment. Baker Hughes Incorporated, a
Delaware corporation (the “Company”), hereby establishes
an incentive compensation plan to be known as the “Baker
Hughes Incorporated 2002 Long-Term Incentive Plan” (this
“Plan”), to reward certain directors, corporate officers and key
employees of the Company by enabling them to acquire shares
of common stock of the Company and to receive other com-
pensation based on common stock of the Company or certain
performance measures. This Plan permits the grant of Nonquali-
fied Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Performance
Shares, Performance Units, Stock Awards and Cash-Based
Awards (as this Plan defines each of those terms below).
Subject to approval by the Company’s stockholders, this
Plan shall become effective as of March 6, 2002 (the “Effective
Date”) and shall remain in effect as provided in Section 1.3.
1.2 Objectives. This Plan is designed to attract and retain
key employees of the Company and its Affiliates (defined
below), to attract and retain qualified directors of the Com-
pany, to encourage the sense of proprietorship of those
employees and directors and to stimulate the active interest of
these persons in the development and financial success of the
Company and its Affiliates. These objectives are to be accom-
plished by making Awards (defined below) under this Plan and
thereby providing Participants (defined below) with a proprie-
tary interest in the growth and performance of the Company
and its Affiliates.
1.3 Duration. This Plan shall commence as of the Effective
Date and shall remain in effect, subject to the right of the
Board of Directors to amend or terminate this Plan at any time
pursuant to Article 15, until all Shares subject to it shall have
been purchased or acquired according to this Plan’s provisions.
However, in no event may an Award be granted under this
Plan on or after the tenth anniversary of the Effective Date.
Article 2. Definitions and Construction.
2.1 Whenever used in this Plan, the following capitalized
terms in this Section 2.1 shall have the meanings set forth
below, and when the meaning is intended, the initial letter
of the word shall be capitalized:
“Affiliate” shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations of the
Exchange Act.
“Award” means, individually or collectively, a grant under
this Plan to Employees of Nonqualified Stock Options, Incen-
tive Stock Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Shares, Performance Units,
Cash-Based Awards or Stock Awards and to Directors of Non-
qualified Stock Options, Restricted Stock, Restricted Stock
Units or Stock Awards.
“Award Agreement” means either (a) an agreement that
the Company and a Participant enters into that sets forth the
terms and provisions applicable to an Award granted under
this Plan or (b) a statement that the Company issues to a Par-
ticipant describing the terms and provisions of the Award.