Baker Hughes 2009 Annual Report Download - page 36

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26 Baker Hughes Incorporated
Restricted Stock Awards
Upon vesting of an RSA award and after the payment of
the taxes due as a result of vesting, the Senior Executive is
required to hold the net profit shares until the applicable
Stock Ownership Level is met. Net profit shares are the shares
remaining after payment of the applicable taxes owed as a
result of vesting of the restricted stock, including shares
applied as payment of the minimum statutory taxes.
Exercise of Stock Options
Upon exercise of a stock option and after netting down
the shares to pay the taxes due as a result of exercise, the
Senior Executive is required to hold 50% of the net profit
shares until the applicable Stock Ownership Level is met. Net
profit shares are the shares remaining after payment of the
applicable taxes owed as a result of the exercise of the option
and the exercise price of the option, including shares applied
as payment of the minimum statutory taxes. The remaining
50% of the net profit shares may be sold without restriction.
Reporting of Taxes upon Vesting
The Senior Executive shall report to the Company’s Corpo-
rate Secretary the number of shares required by the Senior
Executive to pay the applicable taxes upon the vesting of RSAs
and the exercise of stock options, in excess of the minimum
statutory taxes.
Required Ownership Shares
Upon reaching the required ownership level, the Senior
Executive shall certify to the Company’s Corporate Secretary
that the ownership requirements have been met and the Com-
pany’s Corporate Secretary shall confirm such representation
and record the number of shares required to be held by the
Senior Executive based on the closing price of the shares and
the Senior Executive’s current salary level on the day prior to
certification by the Senior Executive (the “Required Ownership
Shares”). At such time the restrictions on selling shares will no
longer apply to the Senior Executive.
The Senior Executive will not be required to accumulate
any shares in excess of the Required Ownership Shares so long
as the Required Ownership Shares are held by the Senior Exec-
utive, regardless of changes in the price of the shares. How-
ever, the Senior Executive may only sell shares held prior to
certification if, after the sale of shares, the Senior Executive
will (a) still own a number of shares equal to at least the
Required Ownership Shares or (b) still be in compliance with
the Stock Ownership Level as of the day the shares are sold
based on current share price and salary level.
Annual Review
The Compensation Committee reviews all Required Own-
ership Shares levels of the Senior Executives covered by the
Policy on an annual basis. The PEO is responsible for ensuring
compliance with this Policy.
Deviations from the Stock Ownership Policy can only be
approved by the Compensation Committee or the PEO, and
then only because of a personal hardship.