Baker Hughes 2009 Annual Report Download - page 54

44 Baker Hughes Incorporated
The Baker Hughes Incorporated Director Compensation
Deferral Plan, as amended and restated effective January 1,
2009 (the “Deferral Plan”), is intended to provide a means
for members of our Board of Directors to defer compensation
otherwise payable and provide flexibility with respect to our
compensation policies. Under the provisions of the Deferral
Plan, directors may elect to defer income with respect to
each calendar year. The compensation deferrals may be stock
option-related deferrals or cash-based deferrals.
COMPENSATION COMMITTEE REPORT
The Compensation Committee held five meetings during
fiscal year 2009. The Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis with
management. Based upon such review, the related discussions
and such other matters deemed relevant and appropriate by
the Compensation Committee, the Compensation Committee
has recommended to the Board of Directors that the Compen-
sation Discussion and Analysis be included in this Proxy State-
ment to be delivered to stockholders.
H. John Riley, Jr. (Chairman)
Edward P. Djerejian
Claire W. Gargalli
Pierre H. Jungels
J. Larry Nichols
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Riley
(Chairman), Djerejian, Jungles, Nichols and Ms. Gargalli, all of
whom are independent non-management directors. None of
the Compensation Committee members has served as an offi-
cer or employee of the Company, and none of the Company’s
executive officers has served as a member of a compensation
committee or board of directors of any other entity which has
an executive officer serving as a member of the Company’s
Board of Directors.
AUDIT/ETHICS COMMITTEE REPORT
The Audit/Ethics Committee is comprised of five members,
each of whom is independent, as defined by the standards
of the NYSE, the rules of the SEC, and under the Company’s
policy for director independence (“Policy for Director Indepen-
dence”). Under the Charter of the Audit/Ethics Committee
(attached as Annex C to this Proxy Statement), the Audit/Ethics
Committee assists the Board of Directors in overseeing matters
relating to the accounting and reporting practices of the Com-
pany, the adequacy of the Company’s disclosure controls and
internal controls, the quality and integrity of the quarterly and
annual financial statements of the Company, the performance
of the Company’s internal audit function and the review and
pre-approval of the current year audit and non-audit fees with
the Company’s Independent Registered Public Accounting Firm.
The Audit/Ethics Committee also oversees the Company’s policies
with respect to risk assessment and risk management and com-
pliance programs relating to legal and regulatory requirements.
During the year ended December 31, 2009, the Audit/Eth-
ics Committee held nine meetings and otherwise met and
communicated with management and with Deloitte & Touche
LLP, the Company’s Independent Registered Public Accounting
Firm for 2009. Deloitte & Touche discussed with the Audit/Ethics
Committee various matters under applicable auditing standards,
including information regarding the scope and results of the
audit and other matters required to be discussed by the State-
ment on Auditing Standards No. 114, “The Auditor’s Commu-
nication with Those Charged with Governance”. The Audit/
Ethics Committee also discussed with Deloitte & Touche its
independence from the Company and received the written
disclosures and the letter from Deloitte & Touche concerning
independence as required by the Public Company Accounting
Oversight Board Ethics and Independence Rule 3526, “Com-
munication with Audit Committees Concerning Independence”.
The Audit/Ethics Committee also reviewed the provision of
services by Deloitte & Touche not related to the audit of the
Company’s financial statements and not related to the review
of the Company’s interim financial statements as it pertains to
the independence of Deloitte & Touche. Deloitte & Touche also
periodically reported the progress of its audit of the effective-
ness of the Company’s internal control over financial reporting.
The Audit/Ethics Committee reviewed and discussed with
management the Company’s financial results prior to the
release of earnings. In addition, the Audit/Ethics Committee
reviewed and discussed with management, the Company’s
internal auditors and Deloitte & Touche the interim financial
information included in the March 31, 2009, June 30, 2009
and September 30, 2009 Form 10-Qs prior to their being filed
with the SEC. The Audit/Ethics Committee also reviewed and
discussed the Company’s audited financial statements for
the year ended December 31, 2009 with management, the
Company’s internal auditors and Deloitte & Touche. Deloitte &
Touche informed the Audit/Ethics Committee that the Com-
pany’s audited financial statements are presented fairly in con-
formity with accounting principles generally accepted in the
United States of America. The Audit/Ethics Committee also
monitored and reviewed the Company’s procedures and policies
relating to the requirements of Section 404 of the Sarbanes-
Oxley Act and related regulations.
Based on the review and discussions referred to above,
and such other matters deemed relevant and appropriate
by the Audit/Ethics Committee, the Audit/Ethics Committee
recommended to the Board of Directors, and the Board has
approved, that the financial statements be included in the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2009.
Anthony G. Fernandes (Chairman)
Larry D. Brady
Clarence P. Cazalot, Jr.
James A. Lash
J. Larry Nichols