<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.1a-11(c) or (S) 240.1a-12
BAKER HUGHES INCORPORATED
-----------------------------------
(Name of Registrant as Specified In Its Charter)
BAKER HUGHES INCORPORATED
--------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11;*
4) Proposed maximum aggregate value of transaction:
*Set forth amount on which the filing is calculated and state how it was
determined.
[X]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount previously paid: $125
2) Form, Schedule or Registration Statement No.: Preliminary Proxy
Statement
3) Filing Party: Baker Hughes Incorporated
4) Date Filed: November 22, 1994
Notes:
<PAGE>
BAKER HUGHES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 25, 1995
The Annual Meeting of the Stockholders of Baker Hughes Incorporated will be
held at the offices of the Company, 3900 Essex Lane, Suite 210, Houston, Texas
on Wednesday, January 25, 1995, at 11:00 a.m., for the purpose of considering
and voting on:
1. Election of four directors to serve for a three year term.
2. Approval of 1995 Employee Annual Incentive Compensation Plan.
3. Approval of 1995 Stock Award Plan.
4. Approval of Amendment to the 1987 Employee Stock Purchase Plan to
increase the authorized shares purchasable under the Plan by 2,000,000.
5. Stockholder Proposal No. 1 on implementation of the MacBride Principles
in Northern Ireland.
6. Such other business as may properly come before the meeting and any
adjournment thereof.
The Board of Directors has fixed December 7, 1994 as the record date for
determining the stockholders of the Corporation entitled to notice of and to
vote at the meeting and any adjournment thereof, and only holders of Common
Stock of the Corporation of record at the close of business on such date will
be entitled to notice of and to vote at said meeting or adjournment.
By order of the Board of Directors,
Lawrence O'Donnell, III
Secretary
Houston, Texas
December 14, 1994
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN
YOUR PROXY AS PROMPTLY AS POSSIBLE. AN ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR THIS PURPOSE.
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Baker Hughes Incorporated, a Delaware
corporation (hereinafter called the "Corporation," "Company" or "Baker
Hughes"), to be voted at the Annual Meeting of Stockholders on Wednesday,
January 25, 1995, and at any and all adjournments thereof. Baker Hughes was
formed as a result of the combination of Baker International Corporation
("Baker") and Hughes Tool Company ("Hughes") on April 3, 1987.
Solicitation of proxies by mail is expected to commence on December 16, 1994,
and the cost thereof will be borne by the Corporation. In addition to such
solicitation by mail, certain of the directors, officers and regular employees
of the Corporation may, without extra compensation, solicit proxies by
telephone, telegraph and personal interview. Arrangements will be made with
brokerage houses, custodians, nominees and other fiduciaries to send proxy
material to their principals, and they will be reimbursed by the Corporation
for postage and clerical expenses. Futhermore, Morrow & Co. has been retained
to assist in the solicitation of proxies from stockholders of the Corporation
for an anticipated fee of $7,000 plus out-of-pocket expenses.
SHARES AS TO WHICH PROXIES HAVE BEEN EXECUTED WILL BE VOTED AS SPECIFIED IN
THE PROXIES. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR THE
ELECTION OF NOMINEES LISTED HEREIN AS DIRECTORS, FOR THE APPROVAL OF THE 1995
EMPLOYEE ANNUAL INCENTIVE COMPENSATION PLAN, FOR THE APPROVAL OF THE 1995 STOCK
AWARD PLAN, FOR THE APPROVAL OF THE AMENDMENT TO THE 1987 EMPLOYEE STOCK
PURCHASE PLAN AND AGAINST STOCKHOLDER PROPOSAL NO. 1.
Proxies may be revoked at any time prior to the exercise thereof by filing
with the Secretary, at the Corporation's executive offices, a written
revocation or a duly executed proxy bearing a later date. The executive offices
of the Corporation are located at 3900 Essex Lane, Houston, Texas 77027-5177.
For a period of at least ten days prior to the Annual Meeting of Stockholders,
a complete list of stockholders entitled to vote at the Annual Meeting will be
available for inspection by stockholders of record during ordinary business
hours for proper purposes at the Corporation's executive offices.
VOTING SECURITIES
The securities of the Corporation entitled to be voted at the Annual Meeting
consist of shares of its Common Stock, $1 par value, of which 141,005,606
shares were issued and outstanding at the close of business on December 7,
1994. Only stockholders of record at the close of business on that date will be
entitled to vote at the meeting. Each share of Common Stock entitles the holder
thereof to one vote on each matter to be considered at the meeting.
Assuming a quorum is present with respect to the election of directors, the
four nominees receiving the greatest number of votes cast by the holders of the
Common Stock will be elected as directors. There will be no cumulative voting
in the election of directors. Assuming a quorum is present with respect to such
matters, the affirmative vote of the holders of a majority of the shares of
Common Stock having voting power present in person or represented by proxy is
required for approval of the 1995 Employee Annual Incentive Compensation Plan,
the 1995 Stock Award Plan, the amendment to the 1987 Employee Stock Purchase
Plan and Stockholder Proposal No. 1. Under Delaware law, abstentions are
treated as present and entitled to vote and thus will be counted in determining
whether a quorum is present and will have the effect of a vote against a
matter. A broker non-vote on a matter (i.e., shares held by brokers or nominees
as to which instructions have not been received from the beneficial owners or
persons entitled to vote and as to which the broker or nominee does not have
discretionary power to vote on a particular matter) is considered not entitled
to vote on that matter and thus is not counted in determining whether a quorum
is present or whether a matter requiring approval of a majority of the shares
present and entitled to vote has been approved.
<PAGE>
The following information relates to the holders of the Corporation's Common
Stock known to the Corporation on September 30, 1994 to own beneficially 5% or
more of the Corporation's Common Stock. For the purposes of this Proxy
Statement beneficial ownership of securities is defined in accordance with the
rules of the Securities and Exchange Commission (the "SEC") to mean generally
the power to vote or dispose of securities, regardless of any economic interest
therein.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES PERCENT
---------------- ------ -------
<S> <C> <C>
FMR Corp.
82 Devonshire Street
Boston, MA 02109............................................ 7,893,377* 5.6
</TABLE>
- - --------
* This number includes shares beneficially owned by certain subsidiaries and/or
affiliates of FMR Corp.
2
<PAGE>
ELECTION OF DIRECTORS
Four Class I directors will be elected at the Annual Meeting of Stockholders
to serve for a three year term expiring at the 1998 Annual Meeting of
Stockholders, with the exception of Mr. Conger, whose term will expire at the
1997 Annual Meeting of Stockholders in accordance with the tenure provisions of
the Corporation's Bylaws. Pursuant to the Corporation's Bylaws, in case of a
vacancy on the Board of Directors, a majority of the remaining directors of the
class in which the vacancy occurs will be empowered to elect a successor, and
the person so elected will hold office for the remainder of the full term of
the director whose death, retirement, resignation, disqualification or other
cause created the vacancy, and thereafter until the election of a successor
director. Each nominee director is at present a director of the Corporation,
and has agreed to continue to serve if elected.
The following table sets forth for each nominee for election as a director
his name, all positions with the Corporation held by him, his principal
occupation, age, year in which he first became a director of the Corporation or
its predecessors and class.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEES PRINCIPAL OCCUPATION AGE SINCE CLASS
-------- -------------------- --- -------- -----
<S> <C> <C> <C> <C>
JACK S. BLANTON Chairman of Houston Endowment, Inc.; 67 1989 I
President of Eddy Refining Company (pe-
troleum products) and past Chairman of
the Board of Regents of The University
of Texas System. Former Chairman of the
Board and Chief Executive Officer of
Scurlock Oil Company from 1983 to 1988.
President of Scurlock Oil Company from
1958 to 1983. Mr. Blanton serves on the
Board of Directors of Texas Commerce
Bancshares, Inc., Southwestern Bell Cor-
poration, Ashland Oil, Inc., Burlington
Northern Inc., Texas Medical Center,
Inc., Pogo Producing Company and The
Methodist Hospital.
HARRY M. CONGER Chairman of the Board and Chief Execu- 64 1987 I
tive Officer of Homestake Mining Company
(mining) since 1982. He has been Chief
Executive Officer of Homestake Mining
Company since 1978, and was President of
that company from 1977 to 1986. He is a
director of CalMat Company, Pacific Gas
& Electric Company and ASA Limited, is
past Chairman of the American Mining
Congress and is on the Board of Trustees
of the California Institute of Technolo-
gy.
JOHN F. MAHER President and Chief Operating Officer of 51 1989 I
Great Western Financial Corporation (fi-
nancial services) since 1986. He was a
Managing Director of Lehman Brothers
Kuhn Loeb from 1979 to 1986. Mr. Maher
is a director of Great Western Financial
Corporation and the Big Brothers of
Greater Los Angeles. He is also National
Trustee of the National Board of Boys &
Girls Clubs of America, a member of the
California Business Roundtable and Over-
seer, Huntington Library, Art Collec-
tions and Gardens.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NOMINEES PRINCIPAL OCCUPATION AGE SINCE CLASS
-------- -------------------- --- -------- -----
<S> <C> <C> <C> <C>
DANA G. MEAD Chairman and Chief Executive Officer of 58 1994 I
Tenneco Inc. (diversified industrial)
since May of 1994. President and CEO of
Tenneco Inc. from February 1994 through
May 1994. President and COO of Tenneco
Inc. from 1992. Serves as Chairman of
Case Corporation and Albright and Wilson
plc. Executive Vice President of Inter-
national Paper from 1989 to 1992. Senior
Vice President of International Paper
from 1986 to 1989. Mr. Mead is a direc-
tor of Tenneco Inc., Cummins Engine Com-
pany, Alco Standard Corporation, Na-
tional Westminster Bancorp and Chairman
of its Audit Committee. He is also a di-
rector and Vice Chairman of the National
Association of Manufacturers. He is a
member of the President's Commission on
White House Fellowships and a Trustee-
at-Large for the Association of Gradu-
ates, U.S. Military Academy, West Point.
Mr. Mead is also a member of the Board
of Visitors of the Duke University
School of the Environment, Massachusetts
Institute of Technology Corporation Po-
litical Science Visiting Committee, the
American Society of Corporate Execu-
tives, the Council on Foreign Relations
and the Council for Excellence in Gov-
ernment.
</TABLE>
INFORMATION CONCERNING CLASS II AND III DIRECTORS
The following table sets forth certain information for those directors whose
present terms will continue after the Annual Meeting. The term of each Class II
and Class III director expires at the 1996 and 1997 Annual Meeting of
Stockholders, respectively, with the exception of Mr. Anderson, who will retire
at the 1996 Annual Meeting of Stockholders in accordance with the tenure
provisions of the Corporation's Bylaws.
<TABLE>
<CAPTION>
DIRECTOR
DIRECTORS PRINCIPAL OCCUPATION AGE SINCE CLASS
--------- -------------------- --- -------- -----
<S> <C> <C> <C> <C>
LESTER M. ALBERTHAL, JR. Chairman of the Board of EDS (informa- 50 1990 II
tion technology service) since 1989 and
President and Chief Executive Officer
since 1986. Mr. Alberthal serves on the
Executive Advisory Board of the Center
for the Pacific Rim, the Board of Trust-
ees of Southern Methodist University,
the Executive Board of the Edwin L. Cox
School of Business at Southern Methodist
University, the Board of Trustees of the
Cooper Institute for Aerobics Research,
the Board of Directors of the Better
Business Bureau of Dallas, the Jason
Foundation for Education, the Texas As-
sociation of Taxpayers and the State
Fair of Texas. He is also a member of
the United States Trade Representative's
Investment and Services Policy Advisory
Committee and the President's National
Security Telecommunications Advisory
Committee.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
DIRECTORS PRINCIPAL OCCUPATION AGE SINCE CLASS
--------- -------------------- --- -------- -----
<S> <C> <C> <C> <C>
GORDON M. ANDERSON Chairman, President and Chief Executive 62 1986 III
Officer of Santa Fe International Corpo-
ration (oil service) since 1991. Mr. An-
derson was Executive Vice President and
Chief Operating Officer of Santa Fe In-
ternational and President of Santa Fe
Drilling from 1986 to 1991. He was Pres-
ident and Chief Operating Officer from
1980 to 1986 of Santa Fe International.
Mr. Anderson is a director of Santa Fe
International, the International Associ-
ation of Oilwell Drilling Contractors
and the American Petroleum Institute. He
is a member of the USC School of Engi-
neering Board of Councilors, the Ameri-
can University in Cairo Board of Trust-
ees, the Chief Executives Organization
and the World Business Council.
VICTOR G. BEGHINI Vice Chairman--Marathon Group, USX Cor- 60 1992 III
poration since 1990 and President--Mara-
thon Oil Company (oil and gas explora-
tion) since 1987. Mr. Beghini joined
Marathon in 1956. He was Vice Presi-
dent--Supply & Transportation from 1978-
1984, President of Marathon Petroleum
Company from 1984 to 1985, Senior Vice
President--Domestic Exploration and Pro-
duction for Marathon Oil Company from
1985 to 1986, and Senior Vice Presi-
dent--Worldwide Production from 1986 to
1987. Mr. Beghini is a director of USX
Corporation, the American Petroleum In-
stitute and a member of the National Pe-
troleum Council.
EUNICE M. FILTER Vice President and Secretary of Xerox 54 1992 III
Corporation (office equipment) since
1984, and Treasurer since 1990. She was
Director of Investor Relations of Xerox
Corporation from 1979 to 1984. Ms. Fil-
ter is a member of the Investor Rela-
tions Association of New York, the Na-
tional Investor Relations Institute, the
American Society of Corporate Secretar-
ies, the Financial Women's Association
of New York and the National Association
of Corporate Treasurers. She is also a
member of the Board of Trustees of Wells
College.
JOE B. FOSTER Chairman of the Board and Chief Execu- 60 1990 II
tive Officer of Newfield Exploration
Company (oil and gas exploration) since
1989. Executive Vice President of
Tenneco Inc. from 1981 to 1988. Director
of Tenneco Inc. from 1983 to 1988. Mr.
Foster is a Trustee of the Texas A&M De-
velopment Foundation, a member of the
National Petroleum Council and the Exec-
utive Committee of the Independent Pe-
troleum Association of America. He is a
past Chairman of the Greater Houston
YMCA and serves on the boards of the
Houston Museum of Natural Science and
the Houston Hospice. Mr. Foster is also
a director of Dual Drilling Company and
New Jersey Resources Corporation.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
DIRECTORS PRINCIPAL OCCUPATION AGE SINCE CLASS
--------- -------------------- --- -------- -----
<S> <C> <C> <C> <C>
RICHARD D. KINDER President and Chief Operating Officer of 50 1994 II
Enron Corp. (diversified energy) since
1990. Vice Chairman of the Board of Enron
Corp. from 1988 to 1990. Mr. Kinder is a
director of Enron Corp., Enron Oil & Gas
Company, Enron Liquids Pipeline Company
and Sonat Offshore Drilling, Inc. He is
also a trustee of the Houston Museum of
Fine Arts and the United Way of the Texas
Gulf Coast, and serves as Chairman of the
Interstate Natural Gas Association of
America.
DONALD C. TRAUSCHT Chairman and Chief Executive Officer of 61 1988 II
Borg-Warner Security Corporation (diver-
sified products and services) since
1992. Chief Operating Officer 1990 and
1991. Vice President--Finance and Strat-
egy from 1987 to 1990. Vice President--
Corporate Planning from 1982 to 1987.
Mr. Trauscht joined Borg-Warner in 1967.
He serves as a member of the Boards of
Borg-Warner Security Corporation, Borg-
Warner Automotive, Inc., ESCO Electron-
ics Corporation, Thiokol Corporation,
Bluebird Corporation and the Mannesmann
Capital Corporation Advisory Board. He
is a trustee of the Museum of Science
and Industry and the Orange County Ma-
rine Institute. He is also a director of
the Sunday Evening Club, Lantern Bay As-
sociation, the Illinois
Literacy Foundation and also serves as
1994 Chairman of the Industrial Manufac-
turing Industry U.S. Savings Bond Cam-
paign.
JAMES D. WOODS Chairman of the Board, President and 63 1979 III
Chief Executive Officer of the Corpora-
tion. Mr. Woods joined Baker in 1955 and
was Executive Vice President from 1982
to 1985, President and Chief Operating
Officer from 1986 to 1987 and became
Chief Executive Officer in January 1987.
He is a director of Wynn's Internation-
al, Inc., Varco International, Inc.,
Broadway Stores Inc., The Kroger Co. and
a member of the National Petroleum Coun-
cil.
</TABLE>
6
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During fiscal year 1994 the Board of Directors held six meetings. During
fiscal year 1994, each non-employee director was paid a monthly retainer of
$2,000, an attendance fee of $1,700 for the first meeting attended in one day
of the Board or any of its committees and $850 for each additional meeting
attended in the same day. Committee chairmen received an additional fifty
percent of the meeting fee. In addition, each non-employee Director is entitled
to retirement benefits in the amount of the annual retainer for service on the
Board at the rate in effect on December 31 of the year preceding the year of
retirement therefrom for a period of up to ten years. Each non-employee
director is allowed to defer from 1% to 100% of his or her annual retainer,
meeting fees and/or retirement income in accordance with the Company's Director
Compensation Deferral Plan. Directors who are employees of Baker Hughes are not
paid any fees or additional remuneration for service as members of the Board or
any of its committees and are not entitled to the retirement benefits mentioned
above. Pursuant to the Corporation's Restated 1987 Stock Option Plan, for
grants made prior to 1993, and the 1993 Stock Option Plan for grants made in
1993 and thereafter, each non-employee director is granted a nonqualified
option to purchase 2,000 shares of Corporation Common Stock effective upon his
initial election to the Board of Directors. The stock option plans also provide
for an annual grant of a nonqualified option to purchase 1,000 shares of
Corporation Common Stock, on the fourth Wednesday of October each year after
the initial grant until expiration of the plans to each person who is a non-
employee director on such date.
The Board of Directors has, in addition to other committees, an Audit/Ethics
Committee, Compensation Committee and a Nominating Committee.
The Audit/Ethics Committee, which is comprised of Messrs. Anderson
(Chairman), Beghini, Foster and Mead, held two meetings during fiscal year
1994. The functions performed by the Audit/Ethics Committee include: reviewing
the scope and results of the audit with the independent accountants, internal
auditors and management; reviewing the independence of the independent
accountants and the internal auditors; reviewing actions by management on the
independent and internal auditors' recommendations; and meeting with
management, the internal auditors and the independent accountants to review the
effectiveness of Baker Hughes' system of internal controls and internal audit
procedures. To promote independence of the audit, the Committee consults
separately and jointly with the independent accountants, the internal auditors
and management. In addition, the Committee monitors the Standards of Conduct
for the Corporation's employees, coordinates compliance and reviews and
investigates non-compliance matters.
The Compensation Committee, which is comprised of Messrs. Maher (Chairman),
Blanton, Conger, Kinder and Trauscht, held three meetings during fiscal year
1994. The functions performed by the Compensation Committee include: reviewing
Baker Hughes' executive salary and bonus structure; reviewing Baker Hughes'
stock option and convertible debenture plans (and making grants thereunder),
employee retirement income plans, employee thrift plan and employee stock
purchase plan; recommending directors' fees; setting bonus goals; approving
salary and bonus awards to key executives; and recommending incentive
compensation and stock award plans for approval by stockholders.
The Nominating Committee, which is comprised of Messrs. Foster (Chairman),
Alberthal, Maher, Mead and Ms. Filter, held no meetings during fiscal year
1994. The functions performed by the Nominating Committee include: selecting
candidates to fill vacancies on the Board of Directors; reviewing the structure
and composition of the Board; and considering qualifications requisite for
continuing Board service. The Board of Directors may increase its size during
any year up to a maximum of 16 members. If the Board of Directors increases its
number of members during the year, the vacancy or vacancies created shall be
filled with new member(s) elected by majority vote of the members in the class
of directors where such increase is occurring. The Committee also considers
nominees recommended by stockholders, provided such notice is received at the
principal executive offices of the Corporation not less than thirty (30) days
nor more than sixty (60) days prior to the Annual Meeting of Stockholders.
Stockholders desiring to make such recommendations should submit the
candidate's name, together with biographical information and his written
consent to nomination to: Chairman, Nominating Committee of the Board of
Directors of Baker Hughes Incorporated, P.O. Box 4740, Houston, Texas 77210-
4740.
7
<PAGE>
During the fiscal year ended September 30, 1994, each director attended at
least 75% of the aggregate number of meetings of the Corporation's Board of
Directors and respective Committees on which he or she served.
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is certain information with respect to beneficial ownership
of the Corporation's Common Stock as of December 7, 1994 by each director,
nominee director, the five most highly compensated executive officers and by
directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
------------------------------
SHARES SUBJECT TO
OPTIONS/CONVERTIBLE DEBENTURES
SHARES OWNED WHICH ARE OR WILL BECOME TOTAL
AS OF EXERCISABLE OR CONVERTIBLE BENEFICIAL % OF
NAME 12/7/94 PRIOR TO 2/7/95 OWNERSHIP CLASS(1)
---- ------------ ------------------------------ ---------- --------
<S> <C> <C> <C> <C>
Lester M. Alberthal,
Jr. ................... 6,030 6,000 12,030 --
Gordon M. Anderson...... 9,082 7,000 16,082 --
Victor G. Beghini....... 1,000 4,000 5,000 --
Jack S. Blanton......... 5,000 7,000 12,000 --
Harry M. Conger......... 2,500(2) 7,000 9,500 --
Eunice M. Filter........ 1,000 4,000 5,000 --
Joe B. Foster........... 2,000 6,000 8,000 --
Richard D. Kinder....... 2,000 2,000 4,000 --
John F. Maher........... 20,939(3) 7,000 27,939 --
Dana G. Mead............ 0 2,000 2,000 --
Donald C. Trauscht...... 3,000 5,000 8,000 --
James D. Woods.......... 234,943 412,976 647,919 --
Max L. Lukens........... 66,059 111,762 177,821 --
Franklin Myers.......... 13,704 67,987 81,691 --
Eric L. Mattson......... 16,534 62,546 79,080 --
Timothy J. Probert...... 4,537 43,846 48,383 --
All directors and
executive officers as a
group (22 persons)..... 424,396 894,158 1,318,554 --
</TABLE>
- - --------
(1) No percent of class is shown for holdings of less than 1%.
(2) Shares held indirectly by the Conger Family Trust.
(3) Includes 553 shares held as custodian for Mr. Maher's minor children.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than ten percent
(10%) of the Corporation's stock, to file initial reports of ownership and
reports of changes in ownership with the SEC, the New York Stock Exchange and
the Pacific Stock Exchange. Executive officers, directors and greater than ten
percent (10%) beneficial owners are required by SEC regulations to furnish the
Corporation with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Corporation and written representations from the executive officers and
directors, the Corporation believes that all Section 16(a) filing requirements
applicable to its executive officers and directors were complied with, with the
exception of the following: Mr. Downey, Vice President--Government Affairs of
the Corporation, inadvertently failed to timely report the acquisition of less
than nine (9) shares of common stock acquired pursuant to the Corporation's
Dividend Reinvestment Plan during fiscal year 1993. This acquisition was
reported to the SEC on Mr. Downey's Form 5 for the fiscal year ended September
30, 1994. Mr. Probert, Vice President and President, Baker Hughes Process
Equipment Operations, inadvertently failed to report on his initial Form 3 the
grant of an employee stock option, for 100 shares of common stock, which was
granted to all domestic employees on October 27, 1993. The grant was reported
to the SEC on Mr. Probert's Form 5 for the fiscal year ended September 30,
1994.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Company and its
subsidiaries to each of the five most highly compensated executive officers of
the Company for services rendered to the Company for the fiscal years ended
September 30, 1994, 1993 and 1992:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- --------------------------------
AWARDS PAYOUTS
--------------------- -------
RESTRICTED STOCK
NAME AND PRINCIPAL OTHER ANNUAL STOCK OPTIONS LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS (SHARES) PAYOUTS COMPENSATION(3)
- - ------------------ ---- -------- -------- ------------ ---------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. D. Woods, Chairman 1994 $795,199 $622,636 -- $294,375(1) 148,037(2) -- $ 93,196
of the Board, President 1993 725,000 175,000 -- -- 80,000 -- 106,293
and Chief 1992 715,385 0 -- -- 67,500 -- 104,797
Executive Officer
M. L. Lukens, Executive 1994 440,808 297,752 -- -- 41,814 -- 37,834
Vice President 1993 365,000 76,323 -- -- 31,739 -- 38,934
and President, 1992 356,153 0 -- -- 25,520 -- 37,780
Baker Hughes Oilfield
Operations, Inc.
Franklin Myers, Senior 1994 295,615 165,427 -- -- 24,785 -- 24,301
Vice President and 1993 270,000 44,272 -- -- 17,608 -- 28,232
General Counsel 1992 266,730 12,380 -- -- 15,180 -- 26,849
E. L. Mattson, Senior 1994 255,800 180,766 -- -- 21,370 -- 20,132
Vice President and 1993 206,151 33,171 -- -- 13,193 -- 20,412
Chief Financial 1992 196,523 9,276 -- -- 10,335 -- 16,229
Officer
T. J. Probert, Vice 1994 225,210 93,028 -- -- 15,048 -- 19,707
President and President 1993 218,000 57,389 -- -- 14,217 -- 21,210
Baker Hughes Process 1992 214,538 124,920 -- -- 11,880 -- 21,605
Equipment Operations
</TABLE>
- - --------
(1) Mr. Woods was awarded 15,000 shares of common stock, valued at $294,375, on
December 1, 1993. The award vests over a three-year period, with 5,000
shares vesting on each anniversary date of the date of the award in each of
1994, 1995 and 1996. Mr. Woods has full rights to receive dividends on the
award.
(2) Includes 48,509 shares which may be acquired upon conversion of convertible
debentures, originally issued on October 30, 1987 pursuant to the Company's
1987 Convertible Debenture Plan (the "1987 Debentures"). The original
maturity date of the 1987 Debentures was October 30, 1987. Such maturity
date was extended until March 31, 1995 by action taken by the Compensation
Committee of the Board of Directors on July 27, 1994.
(3) All Other Compensation includes Company contributions to the Thrift Plan,
Supplemental Retirement Plan and life insurance premiums. Amounts for
fiscal year 1994 for the persons named above are as follows:
<TABLE>
<CAPTION>
WOODS LUKENS MYERS MATTSON PROBERT
------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C>
Thrift Plan Contributions............ $10,688 $ 7,950 $7,387 $9,647 $8,190
Supplemental Retirement Plan
Contributions....................... 58,880 17,053 8,273 3,857 4,912
Life Insurance Premiums.............. 23,628 12,831 8,641 6,628 6,605
</TABLE>
9
<PAGE>
STOCK OPTIONS GRANTED DURING 1994
The following table sets forth certain information regarding stock options
granted during fiscal year 1994 to the persons named in the Summary
Compensation Table above. The theoretical values on date of grant of stock
options granted in 1994 shown below are presented pursuant to SEC rules and are
calculated under a modified Black-Scholes Model for pricing options. The
theoretical values of options trading in the stock markets do not necessarily
bear a relationship to the compensation cost to the Corporation or potential
gain realized by an executive. The actual amount, if any, realized upon
exercise of stock options will depend upon the market price of the
Corporation's Common Stock relative to the exercise price per share of Common
Stock of the stock option at the time the stock option is exercised. There is
no assurance that the theoretical values of stock options reflected in this
table actually will be realized.
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS OPTIONS GRANTED EXERCISE EXPIRATION GRANT DATE
NAME GRANTED(1) TO EMPLOYEES PRICE DATE THEORETICAL VALUE(2)
---- ---------- --------------- -------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
J. D. Woods............. 99,528 4.3% $21.875 10/27/2003 $530,385
48,509(3) 2.1% $15.375 3/31/1995 170,121
M. L. Lukens............ 41,814 1.8% $21.875 10/27/2003 222,827
F. Myers................ 24,785 1.1% $21.875 10/27/2003 132,079
E. L. Mattson........... 21,370 0.9% $21.875 10/27/2003 113,881
T. J. Probert........... 15,048 0.6% $21.875 10/27/2003 80,191
</TABLE>
- - --------
(1) With the exception of an option to purchase 100 shares of Common Stock
which was granted to all employees during fiscal year 1994, options vest in
20% increments, with the first 20% vesting on the date of grant and an
additional 20% vesting on each subsequent anniversary until the fourth
anniversary date at which time the option will be fully vested. The option
to purchase 100 shares will vest on October 27, 1996, the third anniversary
of the date of grant.
(2) The theoretical values on grant date are calculated under the Black-Scholes
Model, modified to give effect to non-transferability factors such as
timing, vesting, liquidity and freely-traded status. The Black-Scholes
Model is a mathematical formula used to value options traded on stock
exchanges. This formula considers a number of factors to estimate the
option's theoretical value, including the stock's historical volatility,
dividend rate, exercise period of the option and interest rates.
(3) See Footnote 2 to Summary Compensation Table.
10
<PAGE>
AGGREGATED OPTION EXERCISES DURING 1994
AND OPTION VALUES AT SEPTEMBER 30, 1994
The following table sets forth certain information regarding options
exercised during fiscal year 1994 by persons named in the Summary Compensation
Table and options held by such persons at September 30, 1994. The values of
unexercised in-the-money stock options at September 30, 1994 shown below are
presented pursuant to Commission rules. The actual amount, if any, realized
upon exercise of stock options will depend upon the market price of the
Corporation's Common Stock relative to the exercise price per share of Common
Stock of the stock option at the time the stock option is exercised. There is
no assurance that the values of unexercised in-the-money stock options
reflected in this table will be realized.
<TABLE>
<CAPTION>
OPTION EXERCISES UNEXERCISED OPTIONS AT SEPTEMBER 30, 1994
------------------------ -------------------------------------------------
VALUE OF UNEXERCISED
NUMBER OF OPTIONS IN-THE-MONEY OPTIONS
------------------------ -----------------------
SHARES ACQUIRED VALUE NOT NOT
NAME ON EXERCISE REALIZED EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
---- --------------- -------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. D. Woods............. -- -- 286,706(1) 164,526(2) $419,046 0
M. L. Lukens............ -- -- 111,121(3) 66,640(4) 157,130 0
F. Myers................ -- -- 46,457(5) 38,990(6) 0 0
E. L. Mattson........... -- -- 49,510(7) 33,406(8) 84,276 0
T. J. Probert........... -- -- 30,484 27,328 8,312 0
</TABLE>
- - --------
(1) Includes 194,321 shares exercisable upon conversion of convertible
debentures.
(2) Includes 9,883 shares exercisable upon conversion of convertible
debentures.
(3) Includes 74,772 shares exercisable upon conversion of convertible
debentures.
(4) Includes 3,916 shares exercisable upon conversion of convertible
debentures.
(5) Includes 25,369 shares exercisable upon conversion of convertible
debentures.
(6) Includes 2,505 shares exercisable upon conversion of convertible
debentures.
(7) Includes 36,331 shares exercisable upon conversion of convertible
debentures.
(8) Includes 1,687 shares exercisable upon conversion of convertible
debentures.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Corporation has an employment agreement with James D. Woods (the "Woods
Employment Agreement"), which provides for the continuation of employment of
Mr. Woods until January 31, 1997, and for successive one year periods
thereafter, subject to termination as provided therein. During the term of the
Woods Employment Agreement, Mr. Woods is entitled to receive a base salary,
annual cash bonus based upon achievement of performance goals, long term
incentives, and benefits and perquisites which other officers and employees of
the Corporation are entitled to receive, all as established from time to time
by the Board of Directors or the Compensation Committee. Mr. Woods' salary may
be increased (but not decreased) based upon the performance of Mr. Woods during
the year. In addition, the Corporation has granted to Mr. Woods 50,000 shares
of Common Stock of the Corporation which will vest upon his retirement after
January 31, 1997. Such grant is subject to approval by the stockholders of the
1995 Stock Award Plan. Upon termination of the employment of Mr. Woods due to
his Disability (as defined in the Woods Employment Agreement) for a period of
more than 90 days in the aggregate during any period of 12 consecutive months,
or reasonable expectation of such Disability during such period, Mr. Woods
shall be paid his Consulting Compensation (as defined below) and a portion of
his most recently ascertainable incentive bonus. In the event of the death of
Mr. Woods during the term of the Woods Employment Agreement or during any
period in which Mr. Woods is receiving compensation during his Disability, the
Corporation shall pay to Mr. Woods' beneficiary the Consulting Compensation and
a portion of Mr. Woods' most recently ascertainable incentive bonus. Upon
termination of the Woods Employment Agreement by Mr. Woods for Good Reason (as
defined in the Woods Employment Agreement) or by the Corporation without Cause
(as defined in the Woods Employment Agreement), Mr. Woods is entitled to
receive his then annual base salary and the greater
11
<PAGE>
of (a) one-half of his expected value incentive bonus or (b) Mr. Woods'
expected value incentive bonus multiplied by the percentage amount of expected
value incentive bonus a successor chief executive officer receives for such
fiscal year, prorated for the months applicable (all of the foregoing being
subject to adjustment by the GNP price deflator, and being subject to offset by
compensation earned by Mr. Woods from a subsequent employer, but such offset is
limited to 65% of such base salary and incentive bonus), as well as an
immediate vesting of all long term incentive awards, a cash lump sum payment of
the present value of all accrued benefits under the Corporation's supplemental
retirement plan, and a continuation of Mr. Woods' benefits and perquisites, for
the remainder of the term of the Woods Employment Agreement, in return for Mr.
Woods providing consulting to the Corporation. If the Woods Employment
Agreement is terminated by Mr. Woods for any reason other than a Good Reason,
Mr. Woods shall only receive his base salary and benefits through the date of
termination, but no annual bonus. If the Woods Employment Agreement is
terminated by the Corporation for Cause, Mr. Woods shall only receive his base
salary, benefits, and a portion of the most recently ascertainable incentive
bonus up to the date of termination. The Woods Employment Agreement also
provides for a five (5) year consulting arrangement between Mr. Woods and the
Corporation beginning on the date of his retirement or the end of the term of
the Woods Employment Agreement. This consulting arrangement provides that Mr.
Woods will consult to the Corporation and receive as compensation therefor
$400,000 per annum (the "Consulting Compensation") but no other employment
benefits except office and secretarial expenses.
The Corporation has an employment agreement with Max L. Lukens (the "Lukens
Employment Agreement"), which provides for the continuation of employment of
Mr. Lukens for a five (5) year period ending December 6, 1999, subject to
termination as provided therein. During the term of the Lukens Employment
Agreement, Mr. Lukens is entitled to receive a base salary, annual cash bonus
based upon achievement of performance goals, long term incentives, and benefits
and perquisites which other officers and employees of the Corporation are
entitled to receive, all as established from time to time by the Board of
Directors or the Compensation Committee. Mr. Lukens' salary may be increased
(but not decreased) based upon the performance of Mr. Lukens during the year.
In addition, the Corporation has granted to Mr. Lukens 15,000 shares of Common
Stock of the Corporation which will vest on October 26, 1999, provided Mr.
Lukens is employed by the Corporation at such time. Such grant is subject to
the approval of the 1995 Stock Award Plan by the stockholders. Upon termination
of the employment of Mr. Lukens due to his Disability (as defined in the Lukens
Employment Agreement), for a period of more than 90 days in the aggregate
during any period of 12 consecutive months, or reasonable expectation of such
Disability during such period, Mr. Lukens shall be paid one-half of his then
base salary in monthly installments until Mr. Lukens is no longer Disabled or
until December 6, 1999, whichever is the first to occur, and a portion of his
most recently ascertainable incentive bonus. In the event of the death of Mr.
Lukens during the term of the Lukens Employment Agreement or during any period
in which Mr. Lukens is receiving compensation during his Disability, the
Corporation shall pay one-half of Mr. Lukens' then annual base salary to Mr.
Lukens' beneficiary for the remaining term of the Lukens Employment Agreement
or the remaining part of any Disability period, as may be applicable, and a
portion of his most recently ascertainable incentive bonus. Upon termination of
the Lukens Employment Agreement by Mr. Lukens for Good Reason (as defined in
the Lukens Employment Agreement) or by the Corporation without Cause (as
defined in the Lukens Employment Agreement), Mr. Lukens is entitled to receive
his then annual base salary and the greater of (a) one-half of his expected
value incentive bonus or (b) Mr. Lukens' expected value incentive bonus
multiplied by the percentage amount of expected value incentive bonus an
executive officer in a comparable position receives for such fiscal year,
prorated for the months applicable (all of the foregoing being subject to
adjustment by the GNP price deflator, and being subject to offset by
compensation earned by Mr. Lukens from a subsequent employer, but such offset
is limited to 65% of such base salary and incentive bonus), as well as an
immediate vesting of all long term incentive awards, a cash lump sum payment of
the present value of all accrued benefits under the Corporation's supplemental
retirement plan, and a continuation of Mr. Lukens' benefits and perquisites,
for the remainder of the term of the Lukens Employment Agreement, in return for
Mr. Lukens providing consulting to the Corporation. In lieu of the foregoing,
if Mr. Lukens' employment is terminated during the last 18 months of the term
of the Lukens Employment Agreement by Mr. Lukens for Good Reason
12
<PAGE>
or the Corporation without Cause, and the severance benefits provided to
employees pursuant to the Corporation's executive severance policy exceed the
foregoing, Mr. Lukens will receive the normal severance benefits. If the Lukens
Employment Agreement is terminated by Mr. Lukens for any reason other than a
Good Reason, Mr. Lukens shall only receive his base salary and benefits through
the date of termination, but no annual bonus. If the Lukens Employment
Agreement is terminated by the Corporation for Cause, Mr. Lukens shall only
receive his base salary, benefits, and a portion of the most recently
ascertainable incentive bonus up to the date of termination.
The Corporation also has employment agreements with Franklin Myers and Eric
L. Mattson (the "Officers"). The agreements provide that if the Officer should
cease to be in the employ of the Corporation for certain specific reasons
(other than for cause as defined therein), including a change in control, the
Officer will be paid, in equal biweekly installments for a 30-month period, an
amount equal to the sum of (i) two and one-half times the Officer's then
current base salary and (ii) two and one-half times the sum of the cash bonuses
awarded to the Officer during the preceding three years divided by three. In
addition, the Officer's participation in all benefit plans will continue for
the period during which payments are made under the employment agreement. Such
compensation and benefits may be offset by up to 65% of any personal service
income received by the Officer. If termination is a result of the death or
disability of the Officer, an amount equal to one-half of the above described
compensation shall be paid to the Officer or his estate.
COMPENSATION COMMITTEE REPORT
TO OUR STOCKHOLDERS
This report is provided in the Proxy Statement, in accordance with the rules
adopted by the SEC on October 15, 1992, to inform stockholders of the
Compensation Committee's compensation policies for executive officers and the
rationale for compensation paid to the Chief Executive Officer (the "CEO").
To preserve objectivity in the achievement of its goals, the Compensation
Committee is comprised of five independent, non-employee directors who have no
"interlocking" relationships as defined by the SEC. It is the Compensation
Committee's overall goal to develop executive compensation policies that are
consistent with, and linked to, strategic business objectives and Company
values. The Compensation Committee approves the design of, assesses the
effectiveness of, and administers executive compensation programs in support of
Company compensation policies. The Compensation Committee also reviews and
approves all salary arrangements and other remuneration for executives,
evaluates executive performance, and considers related matters.
COMPENSATION PHILOSOPHY
The Company's primary business objective is to maximize stockholder value
over the long term. To accomplish this objective, the Company has developed a
comprehensive business strategy that emphasizes maximizing earnings and stock
price, continuing its leadership in those markets in which the Company
participates, and providing products and services of the highest value.
The following compensation policies are intended to facilitate the
achievement of the Company's business strategies:
. Comprise a significant amount of pay for senior executives in the form of
long-term, at-risk pay to focus management on the long-term interests of
stockholders and balance short-term and long-term business and financial
strategic goals.
. Emphasize variable, at-risk compensation that is dependent upon the level
of success in meeting specified corporate performance goals.
13
<PAGE>
. Encourage a personal proprietary interest to provide executives with a
close identification with the Company and align executives' interests
with those of stockholders.
. Enhance the Company's ability to attract, retain, and encourage the
development of exceptionally knowledgeable and experienced executives
through compensation opportunities.
. Target compensation levels at rates that are reflective of current market
practices to maintain a stable, successful management team.
Competitive market data is provided by an independent compensation
consultant. The data provided compares the Company's compensation practices to
a group of comparative companies. The Company's market for compensation
comparison purposes is comprised of a group of companies who tend to have
national and international business operations and similar sales volumes,
market capitalizations, employment levels, and lines of business. The
Compensation Committee reviews and approves the selection of companies used for
compensation comparison purposes.
The companies chosen for the comparative group used for compensation
comparison purposes generally are not the same companies which comprise the S&P
oilfield services industry index in the Performance Graph included in this
Proxy Statement. The Compensation Committee believes that the Company's most
direct competitors for executive talent are not necessarily all of the
companies that would be included in a published industry index established for
comparing stockholder returns. The formula used by the Compensation Committee
for determining annual incentive bonuses, as discussed below, does however take
into account the S&P oilfield services industry index.
The key elements of the Company's executive compensation are base salary,
annual incentives, long-term compensation, and benefits. These key elements
(other than benefits) are addressed separately below. In determining
compensation, the Compensation Committee considers all elements of an
executive's total compensation package, including severance plans, insurance,
and other benefits.
In 1993, the Internal Revenue Service adopted Section 162(m) of the Internal
Revenue Code of 1986, as amended. Section 162(m) places a limit of $1,000,000
on the amount of compensation that may be deducted by the Company in any year
with respect to the Company's Chief Executive Officer and its four other
highest paid executive officers. Certain performance-based compensation and
certain other compensation that has been approved by stockholders is not
subject to the deduction limit. The Company has qualified certain compensation
paid to executive officers for deductibility under Section 162(m), including
compensation expense related to options granted pursuant to the Company's 1993
Stock Option Plan and shares awarded pursuant to the 1993 Employee Stock Bonus
Plan. The 1995 Employee Annual Incentive Compensation Plan, which is being
presented to stockholders in this Proxy Statement, has been drafted to produce
performance-based compensation within the meaning of Section 162(m); thus the
provisions of Section 162(m) will not apply. To the extent the 1995 Stock Award
Plan, which is also being presented to stockholders in this Proxy Statement,
produces compensation payable to the applicable executive officers, it will be
subject to the limitation requirements for deductibility of Section 162(m). The
Company may from time to time pay compensation to its executive officers that
may not be deductible.
BASE SALARIES
The Compensation Committee regularly reviews each executive's base salary.
Base salaries are targeted at median levels for public companies of Baker
Hughes' relative size. Base salaries for executives are initially determined by
evaluating executives' levels of responsibility, prior experience, breadth of
knowledge, as well as internal equity issues and external pay practices.
Increases to base salaries are driven primarily by individual performance.
Individual performance is evaluated based on sustained levels of individual
contribution to the Company. When evaluating individual performance, the
Compensation Committee considers the executive's efforts in promoting Company
values;
14
<PAGE>
continuing educational and management training; improving product quality;
developing relationships with customers, suppliers, and employees;
demonstrating leadership abilities among coworkers; and other goals.
The base salary for Mr. J. D. Woods (Chairman of the Board, CEO, and
President of the Company) was reviewed at the December 1993 meeting of the
Compensation Committee. In setting Mr. Woods' base salary for fiscal year 1994,
the Compensation Committee reviewed the Company's positive financial
performance during fiscal year 1993 with respect to revenue growth, expense
control, net income and earnings per share. The Compensation Committee also
recognized Mr. Woods' outstanding performance in reorganizing the Company and
reviewed base salary data from the group of comparative companies.
In consideration of these positive factors and in recognition of the fact
that Mr. Woods had not received an increase in base salary since December 1991,
the Committee approved an increase in Mr. Woods' base salary of 6.9% for fiscal
year 1994.
ANNUAL INCENTIVES
The annual incentive plan promotes the Company's pay-for-performance
philosophy by providing executives with direct financial incentives in the form
of annual cash bonuses to achieve Corporate, business unit, and individual
performance goals. Annual bonus opportunities allow the Company to communicate
specific goals that are of primary importance during the coming year and
motivate executives to achieve these goals.
Each year, the Compensation Committee establishes specific goals relating to
each executive's bonus opportunity. Eligible executives are assigned threshold,
target, and maximum bonus levels based on a percentage of base salary. The
percentages have been established based on bonus practices and opportunities
within companies comparable to Baker Hughes' size and/or industry. Executives
earn bonuses to the extent to which preestablished goals are achieved.
Corporate goals are determined each year by the Compensation Committee and
are based upon financial objectives of the Company deemed appropriate by the
Compensation Committee. Such objectives may include earnings per share, profit
after tax, return on net capital employed, or other financial objectives for
the year. Where executives have strategic business unit responsibilities, a
portion of the goal is based on financial performance measures which support
strategic business unit performance. This portion varies with the position of
each individual. However, no bonus is paid unless predetermined threshold
performance levels are reached.
An alternative bonus calculation is also made each year. This calculation
determines the Company's total stockholder return versus a group of peers.
Under this approach, no more than one-half a normal bonus can be paid. The
higher of the financial or alternative bonus is paid in any given year. This
feature provides motivation and reward to executives for superior performance
in the market, even when economic circumstances outside the control of the
executive render the Company's financial plans unachievable.
Target bonus awards are set at a market level (discussed previously). Targets
are considered by the Compensation Committee to be achievable, but to require
above-average performance from each of the executives.
Based on the Company's fiscal year 1994 financial performance, predetermined
bonus objectives, as set by the Compensation Committee, were achieved by each
of the named executive officers. For fiscal year 1994, Mr. Woods earned an
annual bonus in the amount of $622,636.
LONG-TERM INCENTIVES
In keeping with the Company's commitment to provide a total compensation
package which favors at-risk components of pay, long-term incentives comprise
the largest portion of an executive's total
15
<PAGE>
compensation package. The Compensation Committee's objective is to provide
executives with long-term incentive award opportunities that are on par with
grants made within the Company's industry and are reflective of prior
performance.
Long-term incentive award guidelines have been developed based on the same
method used as establishing bonus award guidelines. Practices of comparable
companies have been adapted for use at Baker Hughes. The actual percent granted
varies by position within the Company.
Long-term incentives are provided pursuant to the Company's stock option
plan. Stock options are granted at an option price not less than the fair
market value of the Common Stock on the date of grant. Accordingly, stock
options have value only if the stock price appreciates from the date the
options are granted. This design focuses executives on the creation of
stockholder value over the long term and encourages equity ownership in the
Company.
In fiscal year 1994, Mr. Woods received options to purchase 99,528 shares
with an exercise price of $21.875 as is detailed in the table on page 10 of
this Proxy Statement. In addition, on July 27, 1994, the Compensation Committee
granted an extension of the maturity date of a convertible debenture,
convertible into 48,509 shares of Common Stock, issued to Mr. Woods on October
30, 1987, as explained in Footnote 2 of the Summary Compensation Table on page
9 of this Proxy Statement. The Committee felt such extension was warranted as
certain transactions were taking place within the Company which could have
precluded Mr. Woods from trading in Company securities beyond the original
maturity date of October 30, 1994. As of September 30, 1994, Mr. Woods owned
234,943 shares of the Company's Common Stock, and with the 1994 fiscal year
grant, holds options and convertible debentures to purchase/receive an
additional 451,232 shares.
The option grant made in the 1994 fiscal year was based upon a multiple of
3.0 times Mr. Woods' base salary and represented approximately 4 percent of the
total options granted to employees of the Company during the 1994 fiscal year.
The Compensation Committee determines each year the total amount of options
which will be made available to the Company's executives, as well as the
multiple on base salary which will be used for each group of executives who
will be receiving options, including Mr. Woods. These amounts vary each year
and are based upon what the Compensation Committee believes is appropriate
taking into account the executive's total compensation package and the desire
of the Compensation Committee to create stockholder value, to encourage equity
ownership by the Company's executives, to provide an appropriate link to the
interests of the stockholders, and to provide long-term incentive award
opportunities on par with the Company's industry.
SUMMARY
The Compensation Committee believes that the compensation program for the
executives of the Company is comparable with the compensation programs provided
by comparable companies and serves the best interests of the stockholders of
the Company. The Compensation Committee also believes that annual performance
pay is appropriately linked to individual performance, annual financial
performance of the Company, and stockholder value.
John F. Maher (Chairman)
Jack S. Blanton
Harry M. Conger
Richard D. Kinder
Donald C. Trauscht
16
<PAGE>
CORPORATE PERFORMANCE GRAPH
On an operational basis, Baker Hughes has increased pretax earnings per share
by 38% over the past two years. This was achieved in a drilling market, as
measured by worldwide drilling rigs, that improved by only 6% over the same
time frame. The following graph compares the yearly operational pretax earnings
per share for Baker Hughes and its two closest competitors. The graph indexes
each company's operational results for the twelve months ended September 30,
1992, 1993 and 1994 with 1992 operational pretax earnings per share as 100.
COMPARISON OF THREE YEAR OPERATIONAL PRETAX EARNINGS
BAKER HUGHES INCORPORATED, HALLIBURTON, AND SCHLUMBERGER
[GRAPH GOES HERE]
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Baker Hughes.............................................. 100 129 138
Halliburton............................................... 100 107 124
Schlumberger.............................................. 100 91 75
</TABLE>
17
<PAGE>
The following graph compares the yearly percentage change in the
Corporation's cumulative total stockholder return on its Common Stock (assuming
reinvestment of dividends at date of payment into Common Stock of the Company)
with the cumulative total return on the published Standard & Poor's 500 Stock
Index and the cumulative total return on Standard & Poor's Oil Well Equipment
and Service Industry Group over the preceding five year period. The following
graph is presented pursuant to Commission rules. The Corporation believes that
while total stockholder return is an important corporate performance indicator,
it is subject to the vagaries of the market. In addition to the creation of
stockholder value, the Corporation's executive compensation program is based on
financial and strategic results (see the Comparison of Three-Year Operational
Pretax Earnings graph on Page 17 of this Proxy Statement), and the other
factors set forth and discussed in the Compensation Committee Report on Page 13
of this Proxy Statement.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
BAKER HUGHES INCORPORATED; S&P 500; AND S&P OIL WELL EQUIPMENT & SERVICE
[Chart]
*Total return assumes reinvestment of dividends on a quarterly basis.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Baker Hughes............................ 100 140.44 120.84 118.02 121.05 98.26
S&P 500................................. 100 90.76 118.95 132.03 149.12 154.66
S&P Oil Well Equipment and Service...... 100 134.82 131.10 135.98 142.38 123.18
</TABLE>
The comparison of total return on investment (change in year-end stock price
plus reinvested dividends) assumes that $100 was invested on September 30, 1989
in Baker Hughes Common Stock, the S&P 500 Index and the S&P Oil Well Equipment
and Service Industry Group.
18
<PAGE>
PROPOSAL TO APPROVE THE 1995 EMPLOYEE ANNUAL INCENTIVE COMPENSATION PLAN
The Board of Directors has adopted the Baker Hughes Incorporated 1995
Employee Annual Incentive Compensation Plan which provides for cash bonuses to
executives and key employees of the Corporation and its subsidiaries, effective
October 1, 1994, subject to stockholder approval. The maximum annual award that
any employee may receive under the plan is $1,000,000.
Payments under the Plan are determined based upon achievement of one or more
predetermined financial goals. These financial goals may include profits
before-tax, profits after-tax, earnings per share, and/or the ratio of after-
tax profits to net capital employed. As an alternative to other goals, and in
addition thereto, an award opportunity under the Plan will provide an element
based on a goal tied to total shareholder return ("TSR"). Performance versus
financial goals is determined on an annual basis at the end of each fiscal year
of the Corporation. Payments will be based on either satisfactory achievement
of financial goals (other than TSR goals) which will yield a bonus within a
preestablished range (maximum, target, minimum) or satisfactory achievement of
TSR goals which will yield a bonus equal to a fraction of target bonus
opportunities under the financial goal achievements schedule, whichever is
greater.
Certain nonfinancial objectives may also be factored into the calculation of
payments and may represent a maximum of 20% of target award opportunities.
However, for any individual whose compensation is disclosed in the Proxy
Statement, nonfinancial objectives, if any, will be quantifiable via an
objective formula.
The Plan is administered by the Compensation Committee of the Board of
Directors of the Corporation. For each fiscal year of the Corporation, the
Compensation Committee will determine (i) which of the eligible employees will
participate in the Plan, (ii) the award opportunities for each participant,
(iii) the performance goals for such year, (iv) the nonfinancial objectives, if
any, for each participant, and (v) whether performance goals and nonfinancial
objectives have been achieved.
The Compensation Committee also has the ability to make discretionary
adjustments to bonus amounts. However, limitations are imposed regarding
discretionary adjustments for individuals whose compensation is disclosed in
the Proxy Statement. No upward discretionary adjustments may be made with
respect to bonus amounts payable to such individuals, but downward
discretionary adjustments may be made if such adjustments are made in
accordance with the Plan.
A copy of the 1995 Employee Annual Incentive Compensation Plan is attached as
Exhibit A to this Proxy Statement.
19
<PAGE>
The following table shows certain information with respect to annual
incentive compensation which would have been earned pursuant to the Plan during
fiscal year 1994 if the Plan had been in effect.
NEW PLAN BENEFITS
1995 EMPLOYEE ANNUAL INCENTIVE
COMPENSATION PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($)
- - ----------------- ----------------
<S> <C>
J. D. Woods................................................... $ 622,636
Chairman of the Board, President and Chief Executive Officer
M. L. Lukens.................................................. 297,752
Executive Vice President and President, Baker Hughes Oilfield
Operations, Inc.
F. Myers...................................................... 165,427
Senior Vice President and General Counsel
E. L. Mattson................................................. 180,766
Senior Vice President and Chief Financial Officer
T. J. Probert................................................. 93,028
Vice President and President, Baker Hughes Process Equipment
Operations
All current executive officers as a group..................... 1,817,297
All employees as a group (excluding current executive
officers).................................................... 3,816,316
</TABLE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
Your Board of Directors recommends a vote FOR approval of the 1995 Employee
Annual Incentive Compensation Plan.
PROPOSAL TO APPROVE THE 1995 STOCK AWARD PLAN
The Board of Directors has adopted the Baker Hughes Incorporated 1995 Stock
Award Plan which provides the means through which the Company can provide long
term compensation and incentive opportunities for key employees. The Plan also
allows the Company to attract and retain those persons upon whom rests the
responsibilities for successful management of the Company and further
strengthens their concern for the welfare of the Company and stockholders'
return.
The Plan is effective as of October 26, 1994 subject to approval by the
stockholders of the Company within twelve months after its adoption. The Plan
is administered by the Compensation Committee of the Board which has sole
authority in its discretion to determine which employees shall receive an award
pursuant to the Plan. The awards may, at the Committee's sole discretion, be
issued with vesting requirements which may include, among other things, tenure,
remaining in the employ of the Company, stock ownership and similar issues.
Further, the Committee may take into account the services rendered by the
respective individuals and their present and potential contribution to the
Company's success.
The Plan is limited to 350,000 shares which may be issued in the Committee's
discretion. No awards may be granted under the Plan after October 26, 2004. To
the extent that any award lapses or the rights of its holder terminate, any
shares of Common Stock subject to such award shall be available for grant of a
new award pursuant to the Plan prior to such date.
20
<PAGE>
The Board in its discretion may terminate the Plan at any time with respect
to any shares for which awards have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time
to time provided that no change in any award theretofore granted may be made
which would impair the rights of an employee without the consent of that
employee, and further, the Board may not without the approval of stockholders
amend the Plan to increase the maximum number of shares which may be issued
pursuant to awards (except for certain areas of recapitalization), to change
the class of individuals eligible to receive awards under the Plan, to extend
the maximum period which awards may be granted pursuant to the Plan, to modify
materially the requirements as to eligibility for participation in the Plan, to
materially increase the benefits accruing to participants under the Plan or to
decrease any authority granted to the Committee in the Plan in contravention of
certain SEC rules.
In connection with the proposal by the Board of Directors to adopt the Plan,
the Compensation Committee of the Board set forth certain minimum stock
ownership requirements for executive officers and key employees of the Company.
Such requirements are intended to provide minimum levels of stock ownership by
these employees based on their level of compensation and position within the
Company. Such minimum ownership requirements are as follows:
<TABLE>
<CAPTION>
AMOUNT OF BHI
POSITION STOCK REQUIRED
-------- ---------------------
<S> <C>
Chief Executive Officer 5 times annual salary
Executive Vice President 4 times annual salary
Senior Vice President 3 times annual salary
Vice President 2 times annual salary
Division President 1 time annual salary
</TABLE>
The Compensation Committee intends to make stock awards to match stock
ownership of the foregoing key employees (with the exception of Mr. Woods who
will not participate) in order to encourage additional stock ownership and
assist the key employees in reaching the minimum standards required by the
Company. The matched shares would vest upon the retirement of the employee or
certain other events. The Compensation Committee has also indicated an intent
to grant 50,000 shares to Mr. Woods and 15,000 shares to Mr. Lukens in
connection with their respective employment contracts described elsewhere in
this Proxy Statement.
A copy of the 1995 Stock Award Plan is attached as Exhibit B to this Proxy
Statement.
The following table shows certain information with respect to stock awards
that will be received by Mr. Woods and Mr. Lukens, subject to stockholder
approval of the 1995 Stock Award Plan. Such other awards that may be issued
under the Plan are not determinable at this time.
NEW PLAN BENEFITS
1995 STOCK AWARD PLAN
<TABLE>
<CAPTION>
DOLLAR NUMBER
NAME AND POSITION VALUE(1) OF SHARES
----------------- -------- ---------
<S> <C> <C>
J. D. Woods................................................. $956,250 50,000
Chairman of the Board, President
and Chief Executive Officer
M. L. Lukens................................................ 286,875 15,000
Executive Vice President and President,
Baker Hughes Oilfield Operations, Inc.
</TABLE>
- - --------
(1) Based on $19.125 per share, the fair market value of the Company's Common
Stock on October 26, 1994.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Your Board of Directors recommends a vote FOR approval of the 1995 Stock
Award Plan.
21
<PAGE>
PROPOSAL TO APPROVE AMENDMENT TO THE
1987 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Corporation's 1987 Employee Stock Purchase Plan (the "Purchase
Plan") to make an additional 2,000,000 shares of Common Stock available under
the Purchase Plan. Except as so amended, the provisions of the Purchase Plan
will remain the same as those presently in effect.
The Purchase Plan is administered by the Compensation Committee of the Board
of Directors. The Committee has the power to make, amend and repeal rules and
regulations for the interpretation and administration of the Purchase Plan.
Under the Purchase Plan, the Corporation grants eligible employees options to
purchase shares of Common Stock through a payroll deduction program. These
options are granted once a year on a grant date selected by the Committee
administering the Purchase Plan. The term of each option is a 12-month period
ending on the last day of the option period. The number of shares of Common
Stock subject to each option is the sum of the payroll deductions authorized by
the participant (in an amount determined as of the grant date and to yield
whole shares) divided by 85% of the fair market value of the Common Stock on
the grant date. An option is exercised automatically on the last day of the
option period (the "exercise date") at which time the Corporation deducts from
the participant's account an amount which is sufficient to purchase at the
"option price" the number of shares of Common Stock subject to his option. If
any balance remains in the participant's account, it is refunded to him
promptly after the exercise date. The option price per share is equal to 85% of
the fair market value of the Common Stock on the grant date or the exercise
date, whichever is less.
All employees of the Corporation at the beginning of the option term who are
scheduled to work at least 1,000 hours during the option term are eligible
under the Purchase Plan to purchase shares of Common Stock through regular
payroll deductions (valued in United States dollars) of not less than $5.00 nor
more than 10% of their eligible compensation each pay period but not to exceed
$25,000 in fair market value of the Common Stock at the time of grant.
22
<PAGE>
The following table shows certain information with respect to shares
purchased under the Purchase Plan during fiscal year 1994.
AMENDMENT TO
1987 EMPLOYEE STOCK PURCHASE PLAN
<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME AND POSITION DOLLAR VALUE(1) PURCHASED
----------------- --------------- ---------
<S> <C> <C>
J.D. Woods........................................ $ 19,921 943
Chairman of the Board, President and
Chief Executive Officer
M. L. Lukens...................................... 19,921 943
Executive Vice President and President,
Baker Hughes Oilfield Operations, Inc.
F. Myers.......................................... 19,921 943
Senior Vice President and General Counsel
E. L. Mattson..................................... 17,449 826
Senior Vice President and Chief Financial Officer
T. J. Probert..................................... 0 0
Vice President and President, Baker Hughes
Process Equipment Operations
All current executive officers as a group......... 136,615 6,467
All employees as a group (excluding current
executive officers).............................. 8,835,806 418,263
</TABLE>
- - --------
(1) Based on $21.125 per share, the fair market value of the Corporation's
Common Stock on July 29, 1994.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Your Board of Directors recommends a vote FOR approval of the amendment to
the 1987 Employee Stock Purchase Plan.
23
<PAGE>
STOCKHOLDER PROPOSAL NO. 1 ON
IMPLEMENTATION OF THE MACBRIDE PRINCIPLES IN NORTHERN IRELAND
The following proposal was submitted to Baker Hughes by the New York City
Police Pension Fund, the New York City Fire Department Pension Fund and the
Minnesota State Board of Investment, which hold beneficially 105,400 shares,
32,420 shares and 68,720 shares, respectively, of the Corporation's Common
Stock, and is included in this Proxy Statement in compliance with the rules and
regulations of the Commission.
"WHEREAS, Baker Hughes Incorporated operates a wholly-owned subsidiary in
Northern Ireland, the Hughes Tool Company Ltd.;
WHEREAS, employment discrimination in Northern Ireland has been cited by the
International Commission of Jurists as being one of the major causes of the
conflict in that country;
WHEREAS, the Fair Employment Agency for Northern Ireland has found that Baker
Hughes has not provided equality of opportunity to Ulster's population;
WHEREAS, Dr. Sean MacBride, founder of Amnesty International and Nobel Peace
laureate, has proposed several equal opportunity employment principles to serve
as guidelines for corporations in Northern Ireland. These include:
1. Increasing the representation of individuals from underrepresented
religious groups in the workforce including managerial, supervisory,
administrative, clerical and technical jobs.
2. Adequate security for the protection of minority employees both at the
workplace and while traveling to and from work.
3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special recruitment
efforts should be made to attract applicants from underrepresented
religious groupings.
5. Layoff, recall and termination procedures should not in practice, favor
particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions, and
differential employment criteria, which discriminate on the basis of
religion or ethnic origin.
7. The development of training programs that will prepare substantial
numbers of current minority employees for skilled jobs, including the
expansion of existing programs and the creation of new programs to
train, upgrade and improve the skills of minority employees.
8. The establishment of procedures to assess, identify and actively recruit
minority employees with potential for further advancement.
9. The appointment of a senior management staff member to oversee the
company's affirmative action efforts and the setting up of timetables to
carry out affirmative action principles.
RESOLVED, Stockholders request the Board of Directors to:
1. Make all possible lawful efforts to implement and/or increase activity
on each of the nine MacBride Principles."
PROPONENT'S STATEMENT IN SUPPORT OF PROPOSAL
"--Continued discrimination and worsening employment opportunities have been
cited as contributing to support for a violent solution to Northern Ireland's
problems.
24
<PAGE>
--In May, 1986, the United States District Court ruled in NYCERS vs. American
Brands, 634 F.Supp. 1382 (S.D.N.Y., May 12, 1986) that "all nine of the
MacBride Principles could be legally implemented by management in its Northern
Ireland facility.'
--An endorsement of the MacBride Principles by Baker Hughes will demonstrate
its concern for human rights and equality of opportunity in its international
operations. Please vote your proxy FOR these concerns."
STATEMENT OF THE BOARD OF DIRECTORS AND
MANAGEMENT IN OPPOSITION TO PROPOSAL NO. 1
Baker Hughes has a long standing policy of being an equal opportunity
employer worldwide. This policy requires managers to conduct their employment
practices in a manner that does not discriminate on the basis of race, color,
religion, sex, national origin, age, handicap or veteran's status. Baker
Hughes' operating unit in Northern Ireland, now known as Hughes Christensen
Company, a division of Baker Hughes Limited ("HCC"), has subscribed to this
policy.
In addition, HCC has signed a Declaration of Principle and Intent under the
Northern Ireland Fair Employment Act of 1989 (the "Northern Ireland Fair
Employment Act") indicating its commitment to be an equal opportunity employer.
The Northern Ireland Fair Employment Act has as its purposes the promotion of
equal opportunity and the elimination of discrimination in employment for
persons of different religious and political beliefs.
Your Board of Directors believes HCC's employment policies and practices
ensure that HCC does not discriminate in its employment practices and that
HCC's hiring and promotion practices do not make it more difficult for persons
of a given religious belief to obtain employment or advancement.
The MacBride Principles and the Northern Ireland Fair Employment Act both
seek to eliminate employment discrimination in Northern Ireland. By adopting
the MacBride Principles, HCC would become unnecessarily accountable to two sets
of similar but not identical fair employment guidelines. For these reasons,
your Board of Directors believes that implementation of the MacBride Principles
would be burdensome, superfluous and unnecessary, particularly in light of
HCC's own policies and its compliance with the requirements of the Northern
Ireland Fair Employment Act.
Your Board of Directors has determined that HCC's policies on equal
employment opportunity are entirely consistent with Baker Hughes' obligations
and goals to act as an ethical and responsible member of the business
community. Your Board of Directors does not believe that endorsement of the
MacBride Principles is necessary, appropriate, or in the best interest of Baker
Hughes, its subsidiaries or affiliates, or their respective employees.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Your Board of Directors recommends a vote AGAINST approval of Stockholder
Proposal No. 1 on implementation of the MacBride Principles in Northern
Ireland.
ANNUAL REPORT
The 1994 Annual Report of the Corporation, which includes audited financial
statements for the fiscal year ended September 30, 1994 accompanies this Proxy
Statement; however, such Report is not part of the proxy soliciting
information.
25
<PAGE>
INDEPENDENT AUDITORS
Deloitte & Touche, the Corporation's independent certified public
accountants, have advised the Corporation that they will have representatives
attending the Annual Meeting prepared to answer appropriate questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1996 Annual Meeting
must be received by the Corporation by August 18, 1995 to be considered for
inclusion in the Proxy Statement and form of proxy relating to the 1996 Annual
Meeting.
OTHER MATTERS
The Board of Directors knows of no other matter to be presented at the Annual
Meeting. If any additional matter should be presented properly, it is intended
that the enclosed proxy will be voted in accordance with the discretion of the
persons named in the proxy.
26
<PAGE>
EXHIBIT A
BAKER HUGHES INCORPORATED
1995 EMPLOYEE ANNUAL INCENTIVE COMPENSATION PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT OF THE PLAN. Baker Hughes Incorporated (hereinafter
referred to as the "COMPANY"), a Delaware corporation, hereby establishes an
annual incentive compensation plan to be known as the "BAKER HUGHES
INCORPORATED 1995 EMPLOYEE ANNUAL INCENTIVE COMPENSATION PLAN" (hereinafter
referred to as the "PLAN") as set forth in this document. The Plan permits the
awarding of annual cash bonuses to key employees of the Company and its
subsidiaries, based on the achievement of preestablished performance goals. The
Plan shall become effective as of October 1, 1994, and shall remain in effect
until terminated by the Board of Directors of the Company. Notwithstanding any
provision herein to the contrary, no amount shall be paid under the Plan unless
and until the stockholders of the Company approve the Plan prior to September
30, 1995.
1.2 PURPOSE. The purpose of the Plan is to provide Key Employees with a
meaningful annual incentive opportunity geared toward the achievement of
specific corporate and/or individual goals.
ARTICLE 2
DEFINITIONS
2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when the defined meaning is intended, the
term is capitalized:
(a) "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
(b) "CAUSE" means the occurrence of any one of the following:
(i) The willful and continued failure by a Participant to
substantially perform his/her duties (other than any such failure
resulting from the Participant's disability), after a written demand
for substantial performance is delivered to the Participant that
specifically identifies the manner in which the Company believes that
the Participant has not substantially performed his/her duties, and the
Participant has failed to remedy the situation within ten (10) business
days of receiving such notice; or
(ii) The Participant's conviction for an act of fraud, embezzlement,
theft, or other criminal act constituting a felony; or
(iii) The willful engaging by the Participant in gross misconduct or
malfeasance. However, no act, or failure to act, on the Participant's
part shall be considered "willful" unless done, or omitted to be done,
by the Participant not in good faith and without reasonable belief that
his/her action or omission was in the best interest of the Company; or
(iv) The violation of the Company's Standards of Conduct, which
violation is determined to be material by the Committee.
(c) "COMMITTEE" means the Compensation Committee of the Board or any
other committee appointed by the Board to administer the Plan. The
membership of the Committee shall in all cases be comprised solely of two
or more outside directors (within the meaning of Section 162(m)).
(d) "COMPANY" means Baker Hughes Incorporated, a Delaware corporation,
and any successor thereto.
A-1
<PAGE>
(e) "FINAL AWARD" means the actual award earned for a Plan Year by a
Participant as determined by the Committee (see Article 5.4 herein).
(f) "KEY EMPLOYEE" means an employee of the Company, or any of its
subsidiaries, who, in the opinion of the Chief Executive Officer of the
Company, is in a position to significantly contribute to the growth and
profitability of the Company (see Article 4 herein).
(g) "PARTICIPANT" means a Key Employee who is nominated for participation
by the Chief Executive Officer of the Company and then is selected by the
Committee to participate in the Plan (see Article 4 herein).
(h) "PLAN YEAR" means the Company's fiscal year commencing October 1 and
ending September 30.
(i) "SECTION 162(M)" means section 162(m) (or any successor provision) of
the Internal Revenue Code of 1986, as amended, and applicable interpretive
authority thereunder.
2.2 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
2.3 SEVERABILITY. In the event any provision of the Plan shall be held to be
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
ARTICLE 3
ADMINISTRATION
3.1 THE COMMITTEE. This Plan shall be administered by the Committee in
accordance with the rules that it may establish from time to time that are not
inconsistent with the provisions of the Plan.
The determination of the Committee as to any disputed question arising under
this Plan, including questions of construction and interpretation, shall be
final, binding, and conclusive upon persons.
3.2 INDEMNIFICATION. Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in which
he may be involved by reason of any action taken or failure to act under the
Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of any
judgment in any such action, suit, or proceeding against him, provided he shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the Company's
Restated Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
A-2
<PAGE>
ARTICLE 4
ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY. Eligibility for participation in the Plan shall be limited
to those Key Employees who, by the nature and scope of their position,
contribute to the overall results or success of the Company and its
subsidiaries.
4.2 PARTICIPATION. Participation in the Plan shall be determined annually
based upon the recommendation of the Chief Executive Officer of the Company and
the approval of the Committee. Employees approved for participation shall be
notified in writing of their selection, and of their performance goals and
related Award Opportunities (as defined in Article 5.1), as soon after approval
as is practicable.
4.3 PARTIAL PLAN YEAR PARTICIPATION. The Committee may, upon recommendation
of the Chief Executive Officer of the Company, allow an individual who becomes
eligible after the beginning of a Plan Year to participate in the Plan for that
year. In such case, the Participant's Final Award normally shall be prorated
based on the number of full months of participation. However, the Committee
may, based upon the recommendation of the Chief Executive Officer of the
Company, authorize an unreduced Final Award.
4.4 TERMINATION OF APPROVAL. The Committee may withdraw its approval for
participation in the Plan for a Participant at any time. In the event of such
withdrawal, the employee concerned shall cease to be a Participant as of the
date designated by the Committee and the employee shall be notified of such
withdrawal as soon as practicable following such action. Further, such employee
shall cease to have any right to a Final Award for the Plan Year in which such
withdrawal is effective; provided, however, that the Committee may, in its sole
discretion, authorize a prorated award based on the number of full months of
participation prior to the effective date of such withdrawal.
ARTICLE 5
AWARD DETERMINATION
5.1 AWARD OPPORTUNITIES. As soon as practicable (but in no event later than
ninety (90) days) after the beginning of each Plan Year, the Committee shall
establish, in writing, maximum, target, and minimum incentive award levels (the
"AWARD OPPORTUNITIES") for each Participant. The established Award
Opportunities may vary in relation to the responsibility level of the
Participant. In the event a Participant changes job levels or salary grades
during the Plan Year, the Award Opportunities may be adjusted by the Committee,
in its sole discretion, to reflect the amount of time at each job level and/or
in each salary grade.
5.2 PERFORMANCE GOALS. As soon as practicable (but in no event later than
ninety (90) days) after the beginning of each Plan Year, the Committee shall
establish, in writing, performance goals for each Participant for that Plan
Year. The goals will be based on one or more financial objectives of the
Company determined by and defined by the Committee, which objectives may
include profits before-tax, profits after-tax, earnings per share, and/or the
ratio of after-tax profits to net capital employed; provided, however, that as
an alternative to other goals, and in addition thereto, an Award Opportunity
shall provide an element based on a goal tied to total shareholder return
("TSR"), as defined by the Committee and discussed in Article 5.4. Nonfinancial
objectives may also be included in a Participant's performance goals, and will
not represent more than 20 percent of target Award Opportunities, as discussed
in Article 5.1. Notwithstanding the foregoing, no covered employee (as such
term is defined in Section 162(m)) may have any portion of his Final Award
based on nonfinancial, subjective performance goals.
5.3 ADJUSTMENT OF PERFORMANCE GOALS. The Committee shall have the right to
adjust the performance goals (either up or down) during the Plan Year if it
determines that external changes or other unanticipated business conditions
have materially affected the fairness of the goals and unduly influenced the
Company's
A-3
<PAGE>
ability to meet them. Further, in the event of a Plan Year of less than twelve
(12) months, the Committee shall have the right to adjust the performance
goals, at its discretion, to protect the purpose and intent of the Plan.
Notwithstanding the foregoing, no such adjustment shall be made with respect to
an individual who is a covered employee (within the meaning of Section 162(m))
to the extent the same is considered an upward discretionary increase in the
amount of the Final Award for such individual (within the meaning of Section
162(m)).
5.4 FINAL AWARD DETERMINATIONS. As soon as practicable after the end of each
Plan Year, Final Awards shall be computed for each Participant as determined by
the Committee. The Committee shall certify to what extent the performance goals
established pursuant to Article 5.2 and any other material terms of an award
were in fact satisfied. Then, two (2) independent computations will be made, as
follows:
(a) Achievement of financial goals (other than TSR goals), as discussed
in Article 5.2, shall be assessed via a quantitative formula established by
the Committee. Individuals' award calculations will be based on varying
Award Opportunities, as discussed in Article 5.1. Adjustment will be made
to reflect nonfinancial objectives for eligible Participants, as described
in Article 5.2.
(b) Achievement of TSR goals, as discussed in Article 5.2, shall be
assessed via a quantitative formula established by the Committee.
Individuals' award calculations will be based on one-half of the target
Award Opportunity, as discussed in Article 5.1.
The greater of the resulting two calculations will be used to determine the
Final Award paid for the Plan Year. In determining the Final Award, the
Committee, in its sole discretion, may increase or decrease calculated amounts
to reflect factors regarding performance during the Plan Year which were not,
in the sole opinion of the Committee, appropriately reflected in the Final
Award calculation. Notwithstanding the foregoing, the Final Award to an
individual who is a covered employee (within the meaning of Section 162(m))
will not be subject to upward discretionary adjustment by the Committee.
Downward discretionary adjustment for these individuals will be permitted to
the extent that such downward adjustments do not prevent the Final Awards to
those individuals from being deductible by the Company for federal income tax
purposes under Section 162(m).
5.5 INDIVIDUAL AWARD CAP. The maximum annual Final Award any individual may
receive in connection with the Plan is $1,000,000.
ARTICLE 6
PAYMENT OF FINAL AWARDS
As soon as practicable following the end of each Plan Year, Final Award
payments shall be paid in cash.
ARTICLE 7
TERMINATION OF EMPLOYMENT
7.1 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT. In the
event a Participant's employment is terminated by reason of death, total and
permanent disability (as determined by the Committee), or retirement, the Final
Award, determined in accordance with Article 5.4 herein, shall be reduced so
that it reflects only participation prior to termination. This reduction shall
be determined by multiplying said Final Award by a fraction, the numerator of
which is the months of participation through the date of termination rounded up
to whole months, and the denominator of which is twelve (12). The Final Award
thus determined plus all unpaid amounts, if any, from previous years shall be
paid as soon as practicable following the Committee's determinations under
Article 5.4 hereof for that Plan Year.
A-4
<PAGE>
7.2 EMPLOYMENT TRANSFERS. If a Participant transfers from one division to
another division within the Company, the Final Award for the Participant's time
at the Participant's former division will be prorated for the number of whole
months rounded to the nearest whole month of the Plan Year the Participant was
at that division. The Final Award will be determined as soon as practicable
after the end of the Plan Year and will be based on the financial results at
the close of the Plan Year. The Final Award will be paid at the same time the
other Final Awards for that division are paid. If a Participant is eligible for
a Final Award in his new position, the Final Award will be based on the months
left in the Plan Year, on his new base salary level and Award Opportunities, as
determined by the Committee based upon the recommendation of the Chief
Executive Officer of the Company.
7.3 DISPOSITION OF BUSINESS. If the Participant's division is disposed of
during the Plan Year, payment of the Participant's Final Award shall be
determined in accordance with the following alternatives:
(a) If the acquiring party of the division offers employment to the
Participant and assumes the obligations under the Plan, either directly or
indirectly, and the Participant accepts such offer of employment, the
Company shall not be obligated to pay the Final Award and such obligation
shall be that of the acquiring party in accordance with the Final Award
parameters; or
(b) If the acquiring party does not assume the obligations under the
Plan, whether or not the Participant is offered and accepts employment,
then the Participant will receive a prorated Final Award for the portion of
the Plan Year that the Participant was employed by the Company prior to the
date of the consummation of the sale of the division, to be paid at the
same time other Final Awards are paid under the Plan. The computation shall
be made on the basis of the number of whole months rounded to the nearest
whole month of the Plan Year that the Participant was in active service
with the Company; or
(c) If the acquiring party of the division offers employment to the
Participant and assumes the obligations under the Plan, either directly or
indirectly, and the Participant rejects such employment, the Participant
shall be deemed to have voluntarily resigned as provided under Article 7.4
below.
7.4 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event a Participant's
employment is terminated voluntarily by the employee or by the Company for
Cause, all of the Participant's rights to a Final Award for the Plan Year then
in progress shall be forfeited. If a Participant's termination is for any
reason other than as described in Article 7.3, death, disability, retirement,
voluntary resignation, or Cause, the Participant will receive a prorated bonus
award for the portion of the Plan Year that the Participant was employed by the
Company, computed as determined by the Committee, to be paid at the same time
other Final Awards are paid under the Plan.
ARTICLE 8
RIGHTS OF PARTICIPANTS
8.1 EMPLOYMENT. Nothing in this Plan shall interfere with or limit in any way
the right of the Company to terminate any Participant's employment at any time
for any reason, nor confer upon any Participant any right to continue in the
employ of the Company. For all purposes of the Plan, a Participant shall be
considered to be in the employment of the Company as long as he or she remains
employed on a full-time basis by the Company or any of its subsidiaries or is
on an authorized leave of absence approved by the Committee. Any question as to
whether and when there has been a termination of a Participant's employment,
and the reason for such termination, shall be determined solely by the
Committee, and its determination shall be final and conclusive.
8.2 PARTICIPATION. No Participant or other employee shall at any time have a
right to be selected for participation in the Plan for any Plan Year, despite
having been selected for participation in a previous Plan Year.
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<PAGE>
8.3 NONTRANSFERABILITY. No right or interest of any Participant in this Plan
shall be assigned or transferable, or subject to any lien, directly, by
operation of law, or otherwise, including execution, levy, garnishment,
attachment, pledge, and bankruptcy.
ARTICLE 9
BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his death before he receives
any or all of such benefit. Each designation will revoke all prior designations
by the same Participant, shall be in a form prescribed by the Committee, and
will be effective only when filed by the Participant in writing with the
Committee during his lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate.
ARTICLE 10
AMENDMENT AND TERMINATION
The Board may modify or amend, in whole or in part, any or all of the
provisions of this Plan, or suspend or terminate it entirely; provided, that no
such modification, amendment, suspension, or termination may, without the
consent of a Participant (or his beneficiary in the case of the death of the
Participant), reduce the right of a Participant (or his beneficiary as the case
may be) to a payment or distribution hereunder to which he is entitled with
respect to a Plan Year that has ended prior to such modification, amendment,
suspension, or termination.
ARTICLE 11
GOVERNING LAW AND WITHHOLDING
11.1 GOVERNING LAW. THE PLAN, AND ALL AWARDS HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
11.2 WITHHOLDING TAXES. The Company shall have the right to deduct from all
payments under this Plan any Federal, state, or local taxes required by law to
be withheld with respect to such payments.
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EXHIBIT B
BAKER HUGHES INCORPORATED
1995 STOCK AWARD PLAN
I. PURPOSE
The purpose of the BAKER HUGHES INCORPORATED 1995 STOCK AWARD PLAN (the
"PLAN") is to provide a means through which BAKER HUGHES INCORPORATED, a
Delaware corporation (the "COMPANY"), and its subsidiaries may attract able
persons to enter the employ of the Company and to provide a means whereby those
persons upon whom the responsibilities of the successful administration and
management of the Company rest, and whose present and potential contributions
to the welfare of the Company are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of the Company
and their desire to remain in its employ. A further purpose of the Plan is to
provide such persons with additional incentive and reward opportunities
designed to enhance the profitable growth of the Company. Accordingly, the Plan
provides for granting stock Awards to Employees as provided herein.
II. DEFINITIONS
The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:
(a) "AWARD" means, individually or collectively, any stock award granted
under the Plan.
(b) "AWARD AGREEMENT" means a written agreement between the Company and a
Holder with respect to an Award.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to any section and any regulations under
such section.
(e) "COMMITTEE" means the committee charged with the administration of
the Plan in accordance with Article IV.
(f) "COMMON STOCK" means the common stock, par value $1 per share, of the
Company.
(g) "COMPANY" means Baker Hughes Incorporated.
(h) "EMPLOYEE" means any person in an employment relationship with the
Company or with one of its subsidiaries.
(i) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(j) "HOLDER" means an Employee who has been granted an Award.
(k) "PLAN" means Baker Hughes Incorporated 1995 Stock Award Plan, as
amended from time to time.
(l) "RULE 16B-3" means SEC Rule 16b-3 promulgated under the 1934 Act, as
such may be amended from time to time, and any successor rule, regulation
or statute fulfilling the same or a similar function.
III. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall be effective as of October 26, 1994, the date of its adoption
by the Board, provided the Plan is approved by the stockholders of the Company
within twelve months thereafter and on or prior to the date of the first annual
meeting of stockholders of the Company held subsequent to the acquisition of an
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equity security by a Holder hereunder for which exemption is claimed under Rule
16b-3. No further Awards may be granted under the Plan after October 26, 2004.
The Plan shall remain in effect until all Awards granted under the Plan have
been satisfied or expired.
IV. ADMINISTRATION
(a) COMPOSITION OF COMMITTEE. The Plan shall be administered by the
Compensation Committee of the Board which shall be (i) appointed by the Board,
(ii) consist of at least three members of the Board and (iii) constituted so as
to permit the Plan to comply with Rule 16b-3. No member of the Committee shall
be eligible to receive an Award under the Plan and no person who has received
an Award in the preceding year shall be eligible to serve on the Committee.
(b) POWERS. Subject to the provisions of the Plan, the Committee shall have
sole authority, in its discretion, to determine which Employees shall receive
an Award, the time or times when such Award shall be made, the number of shares
of Common Stock which may be issued under each such Award, and the vesting
requirements which apply to each such Award. In making such determinations the
Committee may take into account the nature of the services rendered by the
respective individuals, their present and potential contribution to the
Company's success and such other factors as the Committee in its discretion
shall deem relevant.
(c) ADDITIONAL POWERS. The Committee shall have such additional powers as are
delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, the Committee is authorized to construe the Plan and
the respective Award Agreements executed thereunder, to prescribe such rules
and regulations relating to the Plan as it may deem advisable to carry out the
Plan, and to determine the terms, restrictions and provisions of each Award,
and to make all other determinations necessary or advisable for administering
the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in any Award Agreement in the manner and to the
extent it shall deem expedient to carry it into effect. The determinations of
the Committee on the matters referred to in this Article IV shall be
conclusive.
V. AWARD LIMITS AND SHARES SUBJECT TO THE PLAN
(a) AWARD LIMITS. The Committee may, from time to time, grant Awards to one
or more individuals determined by it to be eligible for participation in the
Plan in accordance with the provisions of paragraph VI. Subject to paragraph
VIII, the aggregate number of shares of Common Stock that may be issued under
the Plan shall not exceed 350,000 shares. Shares shall be deemed to have been
issued under the Plan only to the extent actually issued and delivered pursuant
to an Award. To the extent that an Award lapses or the rights of its Holder
terminate, any shares of Common Stock subject to such Award shall again be
available for the grant of an Award.
(b) STOCK OFFERED. The stock to be offered pursuant to the grant of an Award
may be authorized but unissued Common Stock or Common Stock previously issued
and outstanding and reacquired by the Company.
VI. ELIGIBILITY
Awards may be granted only to key Employees (including officers and directors
who are also key Employees) as determined by the Committee. An Award may be
granted on more than one occasion to the same person.
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VII. STOCK AWARDS
(a) AWARD GRANTS. Awards which may be granted by the Committee pursuant to
the Plan are rights to receive shares of Common Stock which vest over a period
of time or upon the occurrence of an event as established by the Committee,
without payment of any amounts by the Holder thereof to the Company (except to
the extent otherwise required by law, such as income or transfer taxes) or
satisfaction of any performance criteria or objectives.
(b) AWARD PERIOD. The Committee shall establish, with respect to and at the
time of each Award, a period over which or the event upon which the Award shall
vest with respect to the Holder.
(c) AWARDS CRITERIA. In determining the grant of an Award, the Committee may
take into account an individual's responsibility level, performance, potential,
length of service, age, other Awards, compensation, other Common Stock
ownership and such other considerations as it deems appropriate.
(d) PAYMENT. Following the end of the vesting period for an Award, the Holder
of an Award shall be entitled to receive the underlying shares of Common Stock
represented by the Award as soon as administratively practicable following such
vesting. Cash dividend equivalents may be paid during or after the vesting
period with respect to an Award, as determined by the Committee.
(e) TERMINATION OF EMPLOYMENT. An Award shall terminate if the Holder does
not remain continuously in the employ of the Company at all times during the
applicable vesting period, except as may be otherwise determined by the
Committee or as set forth in the Award at the time of grant.
(f) AGREEMENTS. At the time any Award is made under this paragraph VII, the
Company and the Holder shall enter into an Award Agreement setting forth each
of the matters contemplated hereby as the Committee may determine to be
appropriate. The terms and provisions of the respective Award Agreements need
not be identical.
VIII. RECAPITALIZATION OR REORGANIZATION
(a) The shares with respect to which Awards may be granted are shares of
Common Stock as presently constituted, but if, and whenever, prior to the
expiration of an Award theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a
stock dividend on Common Stock without receipt of consideration by the Company,
the number of shares of Common Stock with respect to which such Award may
thereafter be exercised or satisfied, as applicable, (i) in the event of an
increase in the number of outstanding shares shall be proportionately
increased, and (ii) in the event of a reduction in the number of outstanding
shares shall be proportionately reduced.
(b) If the Company recapitalizes or otherwise changes its capital structure,
thereafter upon any exercise or satisfaction, as applicable, of an Award
theretofore granted, the Holder shall be entitled to receive under such Award,
in lieu of the number of shares of Common Stock then covered by such Award, the
number and class of shares of stock and securities to which the Holder would
have been entitled to receive pursuant to the terms of the recapitalization if,
immediately prior to such recapitalization, the Holder had been the holder of
record of the number of shares of Common Stock then covered by such Award.
(c) In the event of changes in the outstanding Common Stock by reason of
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Award and not otherwise provided for by this paragraph
VIII, any outstanding Awards and any agreements evidencing such Awards shall be
subject to adjustment by the Committee at its discretion as to the number of
shares of Common Stock subject to such Awards. In the event of any such change
in the outstanding Common Stock, the aggregate number of shares available under
the Plan may be appropriately adjusted by the Committee, whose determination
shall be conclusive.
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(d) The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reoganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities ahead of
or affecting Common Stock or the rights thereof, the dissolution or liquidation
of the Company or any sale, lease, exchange or other disposition of all or any
part of its assets or business or any other corporate act of proceeding.
(e) Any adjustment provided for in Subparagraphs (a), (b) or (c) above shall
be subject to any required stockholder action.
(f) Except as hereinbefore expressly provided, the issuance by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares of obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
of shares of Common Stock subject to Awards theretofore granted.
IX. AMENDMENT AND TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Awards have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time
to time; provided that no change in any Award theretofore granted may be made
which would impair the rights of the Holder without the consent of the Holder,
and provided, further, that the Board may not, without approval of the
stockholders, amend the Plan;
(a) to increase the maximum number of shares which may be issued pursuant
to Awards, except as provided in paragraph VIII;
(b) to change the class of individuals eligible to receive Awards under
the Plan;
(c) to extend the maximum period during which Awards may be granted under
the Plan;
(d) to modify materially the requirements as to eligibility for
participation in the Plan;
(e) to materially increase the benefits accruing to participants under
the Plan; or
(f) to decrease any authority granted to the Committee hereunder in
contravention of Rule 16b-3.
X. MISCELLANEOUS
(a) NO RIGHT TO AN AWARD. Neither the adoption of the Plan by the Company nor
any action of the Board or the Committee shall be deemed to give an employee
any right to be granted an Award or any of the rights hereunder except as may
be evidenced by an Award or by an Award Agreement duly executed on behalf of
the Company, and then only to the extent and on the terms and conditions
expressly set forth therein. The Plan shall be unfunded. The Company shall not
be required to establish any special or separate fund or to make any other
segregation of Common Stock or other assets to assure the payment of any Award.
(b) NO EMPLOYMENT RIGHTS CONFERRED. Nothing contained in the Plan shall (i)
confer upon any Employee any right with respect to continuation of employment
with the Company or any subsidiary or (ii) interfere in any way with the right
of the Company or any subsidiary to terminate his or her employment at any
time.
(c) OTHER LAWS; WITHHOLDING. The Company shall not be obligated to issue any
Common Stock pursuant to any Award granted under the Plan at any time when the
shares covered by such Award have not been registered under the Securities Act
of 1933 and such other state and federal laws, rules or regulations as
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the Company or the Committee deems applicable and, in the opinion of legal
counsel for the Company, there is no exemption from the registration
requirements of such laws, rules or regulations available for the issuance of
such shares. No fractional shares of Common Stock shall be delivered, nor shall
any cash in lieu of fractional shares be paid. The Company shall have the right
to deduct in connection with all Awards any taxes required by law to be
withheld and to require any payments required to enable it to satisfy its
withholding obligations.
(d) NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan shall
be construed to prevent the Company or any subsidiary from taking any corporate
action which is deemed by the Company or such subsidiary to be appropriate or
in its best interest, whether or not such action would have an adverse effect
on the Plan or any Award made under the Plan. No Employee, beneficiary or other
person shall have any claim against the Company or any subsidiary as a result
of any such action.
(e) RESTRICTIONS ON TRANSFER. An Award shall not be transferable otherwise
than by will or the laws of descent and distribution.
(f) RULE 16B-3. It is intended that the Plan and any grant of an Award made
to a person subject to Section 16 of the 1934 Act meet all of the requirements
of Rule 16b-3. If any provision of the Plan or any such Award would disqualify
the Plan or such Award under, or would otherwise not comply with, Rule 16b-3,
such provision or Award shall be construed or deemed amended to conform to Rule
16b-3.
(g) GOVERNING LAW. This Plan shall be construed in accordance with the laws
of the State of Texas, except to the extent that it implicates matters which
are the subject of the General Corporation Law of the State of Delaware which
matters shall be governed by the latter law.
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LOGO
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
JANUARY 25, 1995
BAKER HUGHES INCORPORATED
3900 ESSEX LANE
HOUSTON, TEXAS
<PAGE>
BAKER HUGHES INCORPORATED
P.O. BOX 4740, HOUSTON, TX 77210-4740
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. D. Woods and F. Myers as Proxies, each with
the power to appoint a substitute, and hereby authorizes them to represent and
to vote as designated below, all the shares of common stock of Baker Hughes
Incorporated held of record by the undersigned on December 7, 1994, at the
Annual Meeting of Stockholders to be held on January 25, 1995 or any
adjournment thereof.
COMMENTS: (change of address)
The Board of Directors favors a __________________________________
vote FOR Election of J.S. Blanton, __________________________________
H.M. Conger, J.F. Maher and D.G. __________________________________
Mead as Class I Directors. __________________________________
(over)
P R O X Y
__
/x/ Please mark your | |
votes as in this | 7667
example. ----
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES, FOR THE APPROVAL OF THE 1995 EMPLOYEE ANNUAL INCENTIVE
COMPENSATION PLAN, THE 1995 STOCK AWARD PLAN AND THE AMENDMENT TO THE 1987
EMPLOYEE STOCK PURCHASE PLAN AND AGAINST STOCKHOLDER PROPOSAL NO. 1.
FOR WITHHELD
1. FOR / / WITHHELD / /
all nominees from all
nominees
For, except vote withheld from the following nominee(s):
________________________________________________________
2. 1995 Employee FOR AGAINST ABSTAIN
Annual Incentive / / / / / /
Compensation Plan
3. 1995 Stock / / / / / /
Award Plan
4. Amendment to 1987 / / / / / /
Employee Stock
Purchase Plan
5. Stockholder
Proposal No. 1 / / / / / /
Please sign name(s) exactly as printed
hereon. In signing as attorney, adminis-
trator, guardian or trustee, please give
title as such.
PLEASE MARK, SIGN AND DATE ABOVE AND
RETURN PROMPTLY.
_________________________________________
_________________________________________
SIGNATURE(S) DATE
