Baker Hughes 2009 Annual Report Download - page 22

12 Baker Hughes Incorporated
CHARITABLE CONTRIBUTIONS
During the fiscal year ended December 31, 2009, 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.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended (“Exchange Act”), requires executive officers, direc-
tors 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 reg-
ulations 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, 2009 with the exception of one inadvertent
late filing on Form 4 relating to one transaction for Derek
Mathieson, Vice President and President of Products and Tech-
nology, filed on October 1, 2009 rather than July 22, 2009.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board has adopted procedures for review and approval
or ratification of transactions with “related persons”. We sub-
ject the following related persons to these procedures: direc-
tors, 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
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 Sum-
mary 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 deci-
sions. However, the Compensation Committee members do
receive grants of equity awards under the same program that
covers the Senior Officers. 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 Committee members has any
material business relationships with us.
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 com-
pensation strategy in regards to participation, target awards,
financial goals and actual awards paid to Senior Executives;
(vii) approving and/or recommending to the Board new incen-
tive compensation plans and equity-based compensation
plans, and submitting them for stockholder approval where
appropriate; (viii) approving revisions to salary increases for the
Senior Executives and reviewing compensation arrangements
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; (x) reviewing
the Company’s employee benefit programs and recommend-
ing for approval all committee administrative changes that
may be subject to the approval of the stockholders or the
Board; and (xi) producing an annual compensation committee
report for inclusion in the Company’s Proxy Statement in
accordance with applicable rules and regulations.
Compensation Consultant
The Compensation Committee has retained Cogent Com-
pensation Partners, Inc. since 2008 as its independent com-
pensation consultant. Cogent advises the Compensation
Committee on matters related to the Senior Executives’ com-
pensation and general compensation programs, including
industry best practices. It is planned that this relationship will
continue during 2010.