Baker Hughes 2009 Annual Report Download - page 69

2009 Proxy Statement 59
ANNEX C
BAKER HUGHES INCORPORATED
CHARTER OF THE AUDIT/ETHICS
COMMITTEE OF THE BOARD OF DIRECTORS
(As Amended and Restated October 21, 2009)
The Board of Directors of Baker Hughes Incorporated (the
“Company”) has heretofore constituted and established an
Audit/Ethics Committee (the “Committee”) with authority,
responsibility and specific duties as described in this Charter.
It is intended that this Charter and the composition of the
Committee comply with the rules of the New York Stock
Exchange (the “NYSE”). This document replaces and super-
sedes in its entirety the previous Charter of the Committee
adopted by the Board of Directors of the Company.
Purpose
The Committee’s purpose is to assist the Board of Directors
with oversight of: (i) the integrity of the Company’s financial
statements and financial reporting system, (ii) the Company’s
compliance with legal and regulatory requirements, (iii) the
independent auditor’s qualifications, independence and perfor-
mance and (iv) the performance of the Company’s internal
audit function. The Committee shall also prepare the report of
the Committee to be included in the Company’s annual proxy
statement, carry out the duties and responsibilities set forth in
this Charter and conduct an annual self-evaluation.
Composition
The Committee and Chairman of the Committee shall be
elected annually by the Board of Directors and are subject to
removal pursuant to the terms of the Company’s Bylaws. The
Committee shall be comprised of not less than three non-
employee Directors who are (i) independent (as defined by
Section 10A(m)(3) of the Securities Exchange Act of 1934 and
the rules and regulations thereunder and the NYSE) and (ii)
financially literate (as interpreted by the Board of Directors in
its business judgment). Such Committee members may not
simultaneously serve on the audit committee of more than
three public companies. At least one member of the Commit-
tee shall be an “audit committee financial expert”, as defined
by the Securities and Exchange Commission (“SEC”). The audit
committee financial expert must have: (i) an understanding of
GAAP and financial statements; (ii) experience in the (a) prepa-
ration, auditing, analyzing or evaluating of financial statements
of generally comparable issuers or supervising one or more
persons engaged in such activities and (b) applying GAAP prin-
ciples in connection with the accounting for estimates, accruals
and reserves; (iii) an understanding of internal control over
financial reporting; and (iv) an understanding of audit commit-
tee functions. The Committee may, if appropriate, delegate its
authority to subcommittees.
If a member of the Committee ceases to be independent
for reasons outside the member’s reasonable control, his or
her membership on the committee may, if so permitted under
then applicable NYSE rules, continue until the earlier of the
Company’s next annual meeting of stockholders or one year
from the occurrence of the event that caused the failure to
qualify as independent.
Principal Responsibilities
The principal responsibilities of the Committee are: (i) to
provide assistance to the Board of Directors in fulfilling its
responsibility in matters relating to the accounting and report-
ing practices of the Company, the adequacy of the Company’s
internal controls over financial reporting and disclosure con-
trols and procedures, and the quality and integrity of the
financial statements of the Company; and (ii) to oversee the
Company’s compliance programs. The independent auditor is
ultimately accountable to the Board of Directors and the Com-
mittee, as representatives of the Company’s stockholders, and
shall report directly to the Committee. The Committee has the
ultimate authority and direct responsibility to select, appoint,
evaluate, compensate and oversee the work, and, if necessary,
terminate and replace the independent auditor (subject, if
applicable, to stockholder ratification). The Committee shall
have authority to conduct or authorize investigations into any
matters within its scope of responsibilities.
The Committee shall have the authority to engage inde-
pendent counsel and other advisors, as the Committee deems
necessary to carry out its duties. The Committee shall have
the sole authority to approve the fees paid to any independent
advisor retained by the Committee, and the Company shall
provide funding for such payments. In addition, the Company
must provide funding for ordinary administrative expenses of
the Committee that are necessary or appropriate in carrying
out its duties.
The Committee shall review the composition, expertise and
availability of the Committee members on an annual basis.
The Committee shall also perform a self-evaluation of the
Committee and its activities on an annual basis.
The Committee shall meet in executive session at each reg-
ularly scheduled meeting, including separate, private meetings
with the independent registered public accounting firm, corpo-
rate auditors, general counsel and compliance officer. The
Committee shall also meet in executive session with such
other employees as it deems necessary and appropriate.
This Charter is intended to be flexible so that the Commit-
tee is able to meet changing conditions. The Committee is
authorized to take such further actions as are consistent with
the following described responsibilities and to perform such
other actions as applicable law, the NYSE, the Company’s
charter documents and/or the Board of Directors may require.
To that end, the Committee shall review and reassess the ade-
quacy of this Charter annually. Any proposed changes shall be
put before the Board of Directors for its approval.