<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)240.14a-11(c) or (S)240.14a-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):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(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 or other underlying value of transaction computed pursuant
to Exchange ActRule 0-11 :*
4) Proposed maximum aggregate value of transaction:
* Set forth amount on which the filing is calculated and state how it was
determined.
[_] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Notes:
<PAGE>
BAKER HUGHES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 24, 1996
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 24, 1996, 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. Stockholder Proposal No. 1 on Implementation of the MacBride Principles
in Northern Ireland.
3. Stockholder Proposal No. 2 on Redemption of Stockholder Rights.
4. Such other business as may properly come before the meeting and any
reconvened meeting after an adjournment thereof.
The Board of Directors has fixed December 6, 1995 as the record date for
determining the stockholders of the Corporation entitled to notice of and to
vote at the meeting and any reconvened meeting after an adjournment thereof,
and only holders of Common Stock of the Corporation of record at the close of
business on that date will be entitled to notice of and to vote at that meeting
or a reconvened meeting after an adjournment.
By order of the Board of Directors,
Lawrence O'Donnell, III
Secretary
Houston, Texas
December 12, 1995
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," the "Company" or "Baker
Hughes"), to be voted at the Annual Meeting of Stockholders on Wednesday,
January 24, 1996, and at any and all reconvened meetings after 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 or about December
15, 1995, and the cost thereof will be borne by the Corporation. In addition to
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, the Company has retained Morrow
& Co. 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 AND AGAINST STOCKHOLDER
PROPOSAL NOS. 1 AND 2.
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 (the "Common Stock"), of
which 142,266,924 shares were issued and outstanding at the close of business
on December 6, 1995. 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 at the Annual
Meeting, 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 and
entitled to vote on the matter is required for approval of Stockholder Proposal
Nos. 1 and 2. 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. 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 (e.g.
broker non-votes) will be considered present for quorum purposes but not
considered entitled to vote on that matter. Accordingly, broker non-votes will
not have any impact on the vote on a matter.
<PAGE>
The following information relates to the holders of the Common Stock known to
the Corporation on September 30, 1995 to own beneficially 5% or more of the
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, Massachusetts 02109................................ 18,395,990* 12.9
</TABLE>
- --------
* This number includes shares beneficially owned by certain subsidiaries or
affiliates of FMR Corp.
2
<PAGE>
ELECTION OF DIRECTORS
Four Class II directors will be elected at the Annual Meeting of Stockholders
to serve for a three year term expiring at the 1999 Annual Meeting of
Stockholders, with the exception of Mr. Trauscht, whose term will expire at the
1998 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>
LESTER M. ALBERTHAL, JR. Chairman of the Board of EDS (informa- 51 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 Dallas Medical
Resource, the Points of Light Founda-
tion, the Board of Directors of the Bet-
ter Business Bureau of Dallas, the Jason
Foundation for Education and the State
Fair of Texas. He is Chairman of the
United States Trade Representative's In-
vestment and Services Policy Advisory
Committee and a member of the the Presi-
dent's National Security Telecommunica-
tions Advisory Committee. Mr. Alberthal
serves as Co-Chairman of the Global In-
formation Infrastructure Commission and
also a member of the Board of the Center
for Strategic and International Studies
in Washington, D.C.
JOE B. FOSTER Chairman of the Board and Chief Execu- 61 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 member of the National
Petroleum Council and Chairman of the
Offshore Committee of the Independent
Petroleum 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 New Jersey Resources Cor-
poration.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NOMINEES PRINCIPAL OCCUPATION AGE SINCE CLASS
-------- -------------------- --- -------- -----
<S> <C> <C> <C> <C>
RICHARD D. KINDER President and Chief Operating Officer of 51 1994 II
Enron Corp. (diversified energy) since
1990. Mr. Kinder is a director of Enron
Corp., Enron Oil & Gas 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 is immediate past Chairman of
the Interstate Natural Gas Association of
America.
DONALD C. TRAUSCHT Chairman and Chief Executive Officer of 62 1988 II
Borg-Warner Security Corporation (diver-
sified services) since 1993. Chairman
and Chief Executive Officer of Borg-
Warner Corporation 1991. Vice Presi-
dent--Finance and Strategy from 1987 to
1991. Vice President--Corporate Planning
from 1982 to 1987. Mr. Trauscht joined
Borg-Warner in 1967. He serves as a mem-
ber of the Boards of Borg-Warner Secu-
rity Corporation, Borg-Warner Automo-
tive, Inc., ESCO Electronics Corpora-
tion, Thiokol Corporation, IMO Indus-
tries Inc., Bluebird Corporation and the
Mannesmann Capital Corporation Advisory
Board. He is a trustee of the Orange
County Marine Institute, Lantern Bay As-
sociation and the Illinois Literacy
Foundation.
</TABLE>
INFORMATION CONCERNING CLASS III AND I 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
III and Class I director expires at the 1997 and 1998 Annual Meeting of
Stockholders, respectively, with the exception of Mr. Anderson and Mr. Conger,
who will retire at the 1996 Annual Meeting of Stockholders, and the 1997 Annual
Meeting of Stockholders, respectively, 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>
GORDON M. ANDERSON Chairman, President and Chief Executive 63 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. Member
of the Board of Trustees (Director) of
Oceaneering, Inc.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
DIRECTORS PRINCIPAL OCCUPATION AGE SINCE CLASS
--------- -------------------- --- -------- -----
<S> <C> <C> <C> <C>
VICTOR G. BEGHINI Vice Chairman--Marathon Group, USX Cor- 61 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.
JACK S. BLANTON Chairman of Houston Endowment, Inc.; 68 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
Bank, Inc., SBC Corporation, Ashland,
Inc., Burlington Northern Santa Fe,
Inc., Texas Medical Center, Inc., Pogo
Producing Company and The Methodist Hos-
pital.
HARRY M. CONGER Chairman of the Board and Chief Execu- 65 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.
EUNICE M. FILTER Vice President and Secretary of Xerox 55 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 National Investor
Relations Institute, the American Soci-
ety of Corporate Secretaries, the Finan-
cial Women's Association of New York,
the Financial Executives Institute and
the National Association of Corporate
Treasurers. She is also a member of the
Board of Trustees of Wells College.
MAX L. LUKENS President and Chief Operating Officer of 47 * III
the Company since October 1995. Mr. Luk-
ens joined
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
DIRECTORS PRINCIPAL OCCUPATION AGE SINCE CLASS
--------- -------------------- --- -------- -----
<S> <C> <C> <C> <C>
Baker in 1981. He was Vice President and
Chief Financial Officer of the Company
from 1984-1989; Senior Vice President of
the Company from 1987-1994; President,
Baker Hughes Production Tools from 1989-
1993; President, Baker Hughes Oilfield
Operations from 1993-1995; and Executive
Vice President from 1994-1995. Mr. Luk-
ens serves on the Board of Directors of
Sonat, Inc. and Sonat Offshore Drilling,
Inc.
JOHN F. MAHER President and Chief Operating Officer of 52 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.
JAMES F. MCCALL Executive Director of the American Soci- 61 ** III
ety of Military Comptrollers since 1991.
Lieutenant General and Comptroller of
U.S. Army from 1988 until 1991. Retired
1991. General McCall was commissioned as
2nd Lieutenant of Infantry in 1958 and
was selected into the Army's
Comptroller/Financial Management career
field in 1970. General McCall is also
Chairman of the Board of Enterprise
Bancorp Inc. and Enterprise Federal Sav-
ings Bank.
DANA G. MEAD Chairman and Chief Executive Officer of 59 1994 I
Tenneco Inc. (diversified industrial)
since May of 1994. President and Chief
Executive Officer of Tenneco Inc. from
February 1994 through May 1994. Presi-
dent and Chief Operating Officer of
Tenneco Inc. from March 1992. Serves as
Chairman of Case Corporation. Executive
Vice President and Director of Interna-
tional 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
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 Graduates, U.S. Mili-
tary Academy, West Point. Mr. Mead is
also a member of the Massa-
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
DIRECTORS PRINCIPAL OCCUPATION AGE SINCE CLASS
--------- -------------------- --- -------- -----
<S> <C> <C> <C> <C>
chusetts Institute of Technology Corpo-
ration Political Science Visiting Com-
mittee, the American Society of Corpo-
rate Executives, the Council on Foreign
Relations, the Council for Excellence in
Government, the Business Roundtable and
the Business Council.
JAMES D. WOODS Chairman of the Board and Chief Execu- 64 1979 III
tive Officer of the Corporation. Mr.
Woods joined Baker in 1955 and was Exec-
utive Vice President of Baker from 1982
to 1985, President and Chief Operating
Officer of Baker from 1986 to 1987,
President of the Corporation from 1987
to 1995, and became Chief Executive Of-
ficer of the Corporation in January
1987. He is a director of Wynn's Inter-
national, Inc., Varco International,
Inc., The Kroger Co. and a member of the
National Petroleum Council.
</TABLE>
- --------
* Mr. Lukens is a nominee to fill the vacancy created by the retirement of Mr.
Anderson from the Board at the Company's Annual Meeting of Stockholders to
be held January 24, 1996, due to the term limitation contained in the
Corporation's Bylaws. In accordance with the Corporation's Bylaws, the
remaining Class III directors will vote on his election prior to the
Company's Annual Meeting of Stockholders to be held January 24, 1996.
** General McCall is a nominee to be considered as an addition to the Board of
Directors following the approval of an increase in the number of directors
by the Board of Directors. In accordance with the Corporation's Bylaws, the
remaining Class III directors will vote on his election prior to the Annual
Meeting of Stockholders to be held January 24, 1996.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During fiscal year 1995 the Board of Directors held seven meetings. During
fiscal year 1995, each non-employee director was paid a monthly retainer of
$2,500, an attendance fee of $2,000 for the first meeting of the Board or any
of its committees attended in any one day and $1,000 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 the 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 the 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.
7
<PAGE>
The Audit/Ethics Committee, which is comprised of Messrs. Anderson
(Chairman), Beghini, Foster and Mead, held two meetings during fiscal year
1995. The functions performed by the Audit/Ethics Committee include: reviewing
the scope and results of the annual audit and other matters with the
independent accountants, internal auditors and management; reviewing the
independence of the independent accountants and 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
1995. 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 one meeting during fiscal year
1995. 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 30 days nor more
than 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 or her 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.
During the fiscal year ended September 30, 1995, 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 with the
exception of Mr. Blanton who attended 70% of such meetings, Mr. Conger who
attended 60% of such meetings, Mr. Maher who attended 73% of such meetings and
Mr. Mead who attended 70% of such meetings.
8
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is certain information with respect to beneficial ownership
of the Corporation's Common Stock as of December 6, 1995 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 12/6/95 PRIOR TO 2/6/96 OWNERSHIP CLASS(1)
---- ------------ ------------------------------ ---------- --------
<S> <C> <C> <C> <C>
Lester M. Alberthal,
Jr. ................... 6,530 7,000 13,530 --
Gordon M. Anderson...... 9,082 8,000 17,082 --
Victor G. Beghini....... 1,000 8,717 9,717 --
Jack S. Blanton......... 5,000 8,000 13,000 --
Harry M. Conger......... 2,500(2) 8,000 10,500 --
Eunice M. Filter........ 1,000 5,000 6,000 --
Joe B. Foster........... 2,000 7,000 9,000 --
Richard D. Kinder....... 2,000 3,000 5,000 --
John F. Maher........... 20,939(3) 8,000 28,939 --
James F. McCall......... 0 0 0 --
Dana G. Mead............ 300 3,000 3,300 --
Donald C. Trauscht...... 3,000 6,000 9,000 --
James D. Woods.......... 334,635 480,853 815,488 --
Max L. Lukens........... 147,118 168,738 315,856 --
Eric L. Mattson......... 62,040(4) 77,593 139,633 --
Timothy J. Probert...... 28,315 63,168 91,483 --
Roger P. Herbert........ 7,300 44,553 51,853 --
All directors and
executive officers as a
group (25 persons)..... 815,592 1,263,044 2,078,636 1.5
</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.
(4) Includes 1,180 shares held indirectly by wife.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, 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 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: One report prepared on behalf of Mr. Arthur T.
Downey, Vice President--Government Affairs of the Corporation, was erroneously
routed to an incorrect location and, consequently, was received by the SEC
approximately three days late. Mr. Probert, Vice President and President, Baker
Hughes Process Equipment Operations, inadvertently failed to report on his
initial Form 3, the acquisition of 29 shares of the Common Stock purchased on
the open market in January 1991. This acquisition was reported to the SEC on
Mr. Probert's Form 5 for the fiscal year ended September 30, 1995.
9
<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, 1995, 1994 and 1993:
<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(1) (SHARES) PAYOUTS COMPENSATION(10)
- ------------------ ---- -------- -------- ------------ ---------- -------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. D. Woods, Chairman of
the 1995 $786,763 $769,178 -- $906,250(2) 384,789(3) -- $110,908
Board and Chief
Executive 1994 767,315 622,636 -- 294,375(4) 148,037(5) -- 93,196
Officer 1993 725,000 175,000 -- -- 80,000 -- 106,293
M. L. Lukens, President 1995 490,462 412,500 -- 1,460,937(6) 68,705 -- 51,596
and Chief Operating 1994 426,770 297,752 -- -- 41,814 -- 37,834
Officer 1993 365,000 76,323 -- -- 31,739 -- 38,934
E. L. Mattson, Senior
Vice 1995 324,996 219,375 -- 558,360(7) 42,483 -- 28,526
President and Chief
Financial 1994 246,852 180,766 -- -- 21,370 -- 20,132
Officer 1993 206,151 33,171 -- -- 13,193 -- 20,412
T. J. Probert, Vice 1995 246,415 168,750 -- 244,188(8) 23,709 -- 23,809
President
and President, Baker
Hughes 1994 225,210 93,028 -- -- 15,048 -- 19,707
Process Equipment
Operations 1993 218,000 57,389 -- -- 14,217 -- 21,210
R. P. Herbert, Vice
President- 1995 223,461 147,000 -- 65,700(9) 16,732 -- 16,861
Technology and Market 1994 152,031 69,216 -- -- 10,262 -- 11,532
Development 1993 148,200 30,344 -- -- 9,665 -- 6,582
</TABLE>
- --------
(1) With the exception of Mr. Woods, the named executive officers received a
one-time restricted stock award matching their stock ownership as of
January 31, 1995, pursuant to the Company's 1995 Stock Award Plan (the
"Award Plan"). The awards were made to encourage additional stock ownership
and assist the executives in reaching the minimum stock ownership
requirements adopted by the Company. The matched shares vest upon the
retirement of the executive or certain other events. The executives receive
a cash payment equivalent to the Company's ordinary dividend payment on the
awards on a quarterly basis. The value of restricted stock awards is based
upon the closing stock price of $20.375 per share of the Common Stock on
the New York Stock Exchange on September 30, 1995.
(2) Mr. Woods was awarded 50,000 shares of the Common Stock, valued at
$906,250, on January 25, 1995, pursuant to the Award Plan. The award vests
upon Mr. Woods retirement from the Company. Mr. Woods has full rights to
receive dividends on the award. At September 30, 1995, Mr. Woods held
60,000 shares of restricted stock, valued at $1,222,500.
(3) Includes 49,789 shares which may be acquired upon conversion of convertible
debentures, originally issued on October 26, 1988 pursuant to the Company's
1987 Convertible Debenture Plan (the "1988 Debentures"). The original
maturity date of the 1988 Debentures was October 26, 1995. The maturity
date was extended until April 26, 1996 by action taken by the Compensation
Committee of the Board of Directors on August 25, 1995.
(4) On December 1, 1993, Mr. Woods was awarded 15,000 shares of the Common
Stock, valued at $294,375. 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.
10
<PAGE>
(5) Includes 48,509 shares which could 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, 1994. The
maturity date was extended until March 31, 1995 by action taken by the
Compensation Committee of the Board of Directors on July 27, 1994.
(6) Mr. Lukens was awarded 15,000 shares of the Common Stock, valued at
$271,875 on January 25, 1995, pursuant to the Award Plan. The award vests
on October 26, 1999, provided Mr. Lukens remains in the employ of the
Company. Mr. Lukens has full rights to receive dividends on the award. Mr.
Lukens was also awarded 66,059 shares of the Common Stock, valued at
$1,189,062, on February 1, 1995, pursuant to the Award Plan. See Footnote
(1) above. At September 30, 1995, Mr. Lukens held 81,059 shares of
restricted stock, valued at $1,651,577.
(7) Mr. Mattson was awarded 31,020 shares of the Common Stock, valued at
$558,360, on February 1, 1995, pursuant to the Award Plan. See Footnote (1)
above. At September 30, 1995, Mr. Mattson held 31,020 shares of restricted
stock, valued at $632,032.
(8) Mr. Probert was awarded 13,566 shares of the Common Stock, valued at
$244,188, on February 1, 1995, pursuant to the Award Plan. See Footnote (1)
above. At September 30, 1995, Mr. Probert held 13,566 shares of restricted
stock, valued at $276,407.
(9) Mr. Herbert was awarded 3,650 shares of the Common Stock, valued at
$65,700, on February 1, 1995, pursuant to the Award Plan. See Footnote (1)
above. At September 30, 1995, Mr. Herbert held 3,650 shares of restricted
stock, valued at $74,369.
(10) All Other Compensation includes Company contributions to the Thrift Plan,
Supplemental Retirement Plan and life insurance premiums. Amounts for
fiscal year 1995 for the persons named above are as follows:
<TABLE>
<CAPTION>
WOODS LUKENS MATTSON PROBERT HERBERT
------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Thrift Plan Contributions............ $10,722 $8,159 $8,089 $8,265 $9,375
Supplemental Retirement Plan
Contributions....................... 69,810 27,084 12,463 8,261 2,237
Life Insurance Premiums.............. 30,376 16,353 7,974 7,283 5,249
</TABLE>
11
<PAGE>
STOCK OPTIONS GRANTED DURING 1995
The following table sets forth certain information regarding stock options
granted during fiscal year 1995 to the persons named in the Summary
Compensation Table above. The theoretical values on date of grant of stock
options granted in 1995 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 Common Stock
relative to the exercise price per share 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............. 335,000 24.2% $19.125 10/26/2004 $2,495,415
49,789(3) 3.6% $13.375 4/26/1996 363,061
M. L. Lukens............ 68,705 5.0% $19.125 10/26/2004 511,784
E. L. Mattson........... 42,483 3.1% $19.125 10/26/2004 316,456
T. J. Probert........... 23,709 1.7% $19.125 10/26/2004 176,608
607(4) 0.04% $13.375 4/26/1996 4,426
R. P. Herbert........... 16,732 1.2% $19.125 10/26/2004 124,637
</TABLE>
- --------
(1) 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.
(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. The grant
date theoretical value above assumes a volatility of 22% and a dividend
yield of 2.24%. A 6.06% risk free rate of return is assumed on the options
granted at $19.125 per share with 10 years to expiration, and a 5.60% risk
free rate of return is assumed on the options granted at $13.375 with six
months to expiration.
(3) See Footnote 3 to Summary Compensation Table.
(4) Option originally granted on October 26, 1988. The original expiration date
of the option, October 26, 1995, was extended until April 26, 1996, by
action taken by the Compensation Committee of the Board of Directors on
August 25, 1995.
12
<PAGE>
AGGREGATED OPTION EXERCISES DURING 1995
AND OPTION VALUES AT SEPTEMBER 30, 1995
The following table sets forth certain information regarding options
exercised during fiscal year 1995 by persons named in the Summary Compensation
Table and options held by such persons at September 30, 1995. The values of
unexercised in-the-money stock options at September 30, 1995 shown below are
presented pursuant to SEC rules. The actual amount, if any, realized upon
exercise of stock options will depend upon the market price of the Common Stock
relative to the exercise price per share 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, 1995
------------------------ ------------------------------------------------
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............. 48,509(1) $248,609 364,467(2) 373,256 $432,273 $335,000
M. L. Lukens............ 36,813(1) 175,537 111,762(3) 97,891 17,176 68,705
E. L. Mattson........... 19,352(1) 77,916 51,856(4) 54,191 10,621 42,483
T. J. Probert........... 1,577 5,914 43,847 36,097 10,177 23,709
R.P. Herbert............ -- -- 29,319(5) 25,127 4,184 16,731
</TABLE>
- --------
(1) Shares acquired upon conversion of convertible debentures.
(2) Includes 155,695 shares exercisable upon conversion of convertible
debentures.
(3) Includes 41,875 shares exercisable upon conversion of convertible
debentures.
(4) Includes 18,666 shares exercisable upon conversion of convertible
debentures.
(5) Includes 3,508 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 that 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. 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 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 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
13
<PAGE>
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 services 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 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 for 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 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 that 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.
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 services 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 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.
14
<PAGE>
The Corporation also has an employment agreement with Eric L. Mattson. The
agreement provides that if the Corporation terminates Mr. Mattson without cause
(as defined therein), or if Mr. Mattson terminates his employment for good
reason (as defined therein), in each case, following a change in control, Mr.
Mattson 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 his then current base
salary and (ii) two and one-half times the sum of the cash bonuses awarded to
him during the preceding three years divided by three. In addition, Mr.
Mattson'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 he receives. Pursuant to Mr. Mattson's agreement with the Corporation, a
"change of control" includes any one of the following events: (a) individuals
as of May 22, 1991, constituting the Board of Directors of the Corporation,
cease to constitute at least 75% of the Board, provided that any person
becoming a director after that date whose election or nomination was approved
by a vote of at least a majority of the then incumbent board (other than an
election or nomination of an individual whose initial assumption of the office
is in connection with an actual or threatened election contest as those terms
are used in Rule 14a-11 promulgated pursuant to the Securities Exchange Act of
1934, as amended) shall be considered to be as though that person was a member
of the board incumbent on May 22, 1991; (b) approval of the stockholders of a
reorganization, merger or consolidation with respect to which persons who were
stockholders immediately prior to such a transaction do not immediately
thereafter own more than 50% of the combined voting in the election of
directors of the reorganized, merged or consolidated company's voting
securities, or a liquidation or dissolution of the Corporation or a sale of
substantially all of its assets or (c) determination by the incumbent board of
the Corporation that a change of circumstances has occurred that would be
disruptive to the continuing employment of Mr. Mattson. If termination is a
result of the death or disability of Mr. Mattson, an amount equal to one-half
of the above described compensation shall be paid to Mr. Mattson or his estate.
COMPENSATION COMMITTEE REPORT
TO OUR STOCKHOLDERS
This report is provided in the Proxy Statement, in accordance with SEC rules,
to inform stockholders of the Compensation Committee's compensation policies
for executive officers and the rationale for compensation paid to the Chief
Executive Officer of the Company.
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.
15
<PAGE>
. Emphasize variable, at-risk compensation that is dependent upon the level
of success in meeting specified corporate performance goals.
. 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, including current compensation trends and movements
in salary markets, is provided by an independent compensation consultant who
also advises the Company with regard to the competitiveness of its salary
levels, incentive compensation awards and various benefit plans. 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 that 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 produces
performance-based compensation within the meaning of Section 162(m); thus the
provisions of Section 162(m) do not apply. To the extent the 1995 Stock Award
Plan 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; continuing educational and management training; improving product
quality; developing relationships with customers, suppliers and employees;
demonstrating leadership abilities among coworkers; and other goals.
16
<PAGE>
The base salary for Mr. J. D. Woods (Chairman of the Board and Chief
Executive Officer of the Company) was reviewed at the October 1994 meeting of
the Compensation Committee. In setting Mr. Woods' base salary for fiscal year
1995, the Compensation Committee reviewed the Company's positive financial
performance during fiscal year 1994 with respect to revenue growth, expense
control, net income and earnings per share. The Compensation Committee also
reviewed base salary data from the group of comparative companies.
In consideration of these factors and in recognition of the fact that Mr.
Woods had received a 6.9% increase in base salary in December 1993, the
Compensation Committee approved an increase in Mr. Woods' base salary of 1.8%
for fiscal year 1995. It is the intent of the Committee that Mr. Woods' salary
will remain at this level until his retirement, subject to adjustment to the
extent his salary grade rate range is adjusted by the Compensation Committee.
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. These 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 that 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 1995 financial performance, predetermined
bonus objectives, as set by the Compensation Committee, were achieved by each
of the named executive officers. For fiscal year 1995, Mr. Woods earned an
annual bonus in the amount of $769,178.
LONG-TERM INCENTIVES
In keeping with the Company's commitment to provide a total compensation
package that favors at-risk components of pay, long-term incentives comprise
the largest portion of an executive's total 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.
17
<PAGE>
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 1995, Mr. Woods received options to purchase 335,000 shares
with an exercise price of $19.125 as is detailed in the table on page 12 of
this Proxy Statement. In addition, on August 25, 1995, the Compensation
Committee granted an extension of the maturity date of a convertible debenture,
convertible into 49,789 shares of Common Stock, issued to Mr. Woods on October
26, 1988, as explained in Footnote 3 of the Summary Compensation Table on page
10 of this Proxy Statement. The Compensation Committee felt this extension was
warranted as certain transactions were being contemplated or were taking place
within the Company that could have precluded Mr. Woods from trading in Company
securities beyond the original maturity date of October 26, 1995. As of
September 30, 1995, Mr. Woods owned 334,635 shares of the Common Stock, and
with the 1995 fiscal year grant, holds options and convertible debentures to
purchase or receive an additional 737,723 shares.
The option grant made to Mr. Woods in the 1995 fiscal year was based upon a
multiple of approximately 8.3 times Mr. Woods' base salary and represented
approximately 24 percent of the total options granted to employees of the
Company during the 1995 fiscal year. In making this grant to Mr. Woods, it was
the intent of the Compensation Committee to not only provide him with his
options for fiscal year 1995, but also for the ensuing years until his
retirement, subject to the discretion of the Board of Directors. The
Compensation Committee determines each year the total amount of options that
will be made available to the Company's executives, as well as the multiple on
base salary that 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
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<PAGE>
CORPORATE PERFORMANCE GRAPH
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) 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 SEC 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, and the other factors set forth and discussed
above in "Compensation Committee Report".
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>
1990 1991 1992 1993 1994 1995
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Baker Hughes............................ 100 86.04 84.03 86.19 69.97 78.33
S&P 500................................. 100 131.05 145.47 164.29 170.40 220.90
S&P Oil Well Equipment and Service...... 100 97.24 100.87 105.61 91.37 108.95
</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, 1990
in Baker Hughes Common Stock, the S&P 500 Index and the S&P Oil Well Equipment
and Service Industry Group.
19
<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 Employees' Retirement System, the New
York City Teachers' Retirement System, the New York State Common Retirement
Fund and the Minnesota State Board of Investment, which hold beneficially
105,400 shares, 339,400 shares, 148,300 shares, 972,300 shares and 20,000
shares, respectively, of the Corporation's Common Stock, and is included in
this Proxy Statement in compliance with SEC rules and regulations.
"WHEREAS, Baker Hughes Incorporated operates a wholly-owned subsidiary in
Northern Ireland, the Hughes Tool Company Ltd.;
WHEREAS, the on-going peace process in Northern Ireland encourages us to
search for non-violent means for establishing justice and equality;
WHEREAS, the Fair Employment Agency for Northern Ireland has found that Baker
Hughes has not provided equality of opportunity to Ulster's Catholic
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 groups.
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
"--We believe that our Company benefits by hiring from the widest available
talent pool. An employee's ability to do the job should be the primary
consideration in hiring and promotion decisions.
20
<PAGE>
--Continued discrimination and worsening employment opportunities have been
cited as contributing to support for a violent solution to Northern Ireland's
problems.
--Implementation 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.
STOCKHOLDER PROPOSAL NO. 2 ON
REDEMPTION OF STOCKHOLDER RIGHTS
The following proposal was submitted to Baker Hughes by the United
Brotherhood of Carpenters General Pension Fund, which holds beneficially 10,000
shares of the Common Stock, and is included in this Proxy Statement in
compliance with SEC rules and regulations.
"BE IT RESOLVED: That the shareholders of Baker Hughes, Inc. ("Company") urge
the Board of Directors to redeem the stockholder rights issued pursuant to the
"Stockholder Rights Agreement" unilaterally adopted by the Board of Directors
on March 23, 1988 unless the Stockholder Rights Agreement is approved by a
majority of the voting shares at a meeting of shareholders held as soon as is
practical."
21
<PAGE>
PROPONENT'S STATEMENT IN SUPPORT OF PROPOSAL
"We strongly believe that our Company's financial performance is closely
linked to its corporate governance policies and procedures, and the level of
management accountability they impose. We believe our Company's Stockholder
Rights Agreement, commonly called a "poison pill," remains an impediment to a
corporate governance policy which provides full managerial accountability to
shareholders.
Our Company's poison pill is an extremely powerful anti-takeover device which
effectively prevents a change in control of our Company without the approval of
the board of directors, despite the level of performance. We believe such a
measure injures shareholders by reducing management accountability and
adversely affecting shareholder value.
Baker Hughes' poison pill effectively prevents a change in control of our
Company not endorsed by the board by allowing the board of directors to
unilaterally cut by approximately 50 percent the value of Company shareholdings
held by anyone owning or having the right to acquire 20 percent of the
Company's common stock or making a tender offer for 30% or more of the common
stock. This threat of dilution forces investors to negotiate potential
acquisitions with management instead of making their offer directly to
shareholders. We believe poison pills can pose such an obstacle to a takeover
that management becomes entrenched. We believe the entrenchment of management,
and the lack of accountability that results, can adversely affect shareholder
value.
Our board states it adopted the poison pill to prevent "coercive takeover
tactics." However, by incorporating in the state of Delaware, our Company
enjoys anti-takeover protections from state law.
In the past five years, precatory shareholder proposals to redeem or allow
shareholder votes on poison pills have received majority support at 24 U.S.
publicly-traded companies including Advanced Micro Devices, Community
Psychiatric Centers, Intel, Ryder and Wellman in 1994 alone. Furthermore, since
1990 Philip Morris, Time Warner, United Technologies, Lockheed and La Quinta
Inns have voluntarily redeemed their poison pills. None of these companies have
experienced coercive or abusive takeover tactics after the redemption of their
poison pills.
We strongly believe that it is the shareholders (who are the owners of the
Company), not the directors and managers (who merely act as agents for the
owners), who should have the right to decide what is or is not a fair price for
their shareholdings. Poison pills take this decision away from shareholders by
forcing potential acquires to negotiate with management through the threat of
severe dilution. Again, Delaware law provides protections for shareholders
against so-called "coercive takeover tactics."
We urge you to VOTE FOR this proposal."
STATEMENT OF THE BOARD OF DIRECTORS AND
MANAGEMENT IN OPPOSITION TO PROPOSAL NO. 2
This proponent's proposal urges the Corporation's Board of Directors to
redeem the Stock Purchase Rights that all stockholders possess under the
Corporation's Stockholder Rights Plan (the "Stockholder Rights Plan"). The
Board believes redemption of the Rights would not be in the best interest of
the Corporation and would remove an important protection for stockholders that
was designed to protect your interests. Redemption at this time could
potentially deprive you of substantial economic benefits in the future.
WHAT STOCKHOLDER RIGHTS PLANS DO
Stockholder rights plans were developed in the 1980s to counter a wide range
of coercive tactics which had become common in hostile takeovers. The principal
function of a rights plan is to encourage potential bidders to negotiate with
the board of a target company and to provide the board with the ability to
prevent abusive and coercive takeover tactics that may be harmful to
stockholders. Rights plans give boards time to evaluate offers, investigate
alternatives and take steps necessary to maximize value for all stockholders.
22
<PAGE>
A consensus has gradually emerged among major U.S. corporations that rights
plans do achieve their designed purpose and assist directors in fulfilling
their fiduciary duty to all stockholders. Approximately 70% of the 200 largest
companies on the Fortune 500 list have adopted rights plans. Many of these
companies apparently found adoption of a rights plan to be a prudent step to
take to protect stockholder interests even though they were not the subject of
takeover bids. The Securities and Exchange Commission has also stated in a 1988
release that one of the reasons corporations adopt stockholder rights plans is
to "encourage the development of an auction for the Corporation resulting in
shareholders receiving a higher price for their stock."
Baker Hughes' Stockholder Rights Plan is a typical plan that was adopted to
protect stockholder interests. The plan is not intended to prevent a takeover
of the Corporation on terms that are fair and equitable to all stockholders.
Rather, the plan is designed to deter a bidder from acquiring control of the
Corporation without first negotiating with the Board as well as to deter
abusive takeover tactics that do not treat all stockholders fairly and equally,
such as market accumulations that do not offer a premium to all stockholders
and partial and two-tier tender offers. A bidder who chooses to bypass the
Board is pursuing its own interests and is not concerned with the interests of
the other stockholders. The Stockholder Rights Plan allows the Board an
opportunity to assess the adequacy and fairness of any offer and protect
stockholders against potential abuses during the takeover process.
FIDUCIARY DUTIES OF THE BOARD
Under Delaware law, the Board is responsible for the Corporation's business
and affairs, including the evaluation of any unsolicited offer. The Board
believes that its adoption of the Stockholder Rights Plan was a valid exercise
of that responsibility and that its recommendation to vote against the proposal
is also consistent with its fiduciary duties. Stockholder rights plans have
been repeatedly upheld by the courts, including the Delaware Supreme Court.
ENHANCING STOCKHOLDER VALUE
The Board believes the Stockholder Rights Plan will provide it with
flexibility to negotiate on behalf of the stockholders and will enhance the
Board's ability to obtain the best possible offer from a potential acquiror and
to develop alternatives which may better maximize stockholder values, preserve
the long-term value of the Corporation for the stockholders and ensure that all
stockholders are treated fairly and equally.
The proponent states that Delaware law provides the Corporation with
protection against coercive takeover tactics and that the Corporation does not
need the protection of the Stockholder Rights Plan. Delaware law, however, does
not fully protect corporation's against such tactics nor provide the Board of
Directors with the ability to require any potential acquiror to negotiate with
the Board to assure that stockholders are treated fairly. The Board also
believes that Delaware law may not provide the Corporation with sufficient time
to adequately evaluate and consider options in the face of an inadequate bid
and could force stockholders to accept a less desirable option than what might
otherwise be available if the Corporation were to have the ability to control
the process.
The proponent also suggests that the Stockholder Rights Plan serves to
entrench management. The Board of Directors believes that it has assembled a
highly qualified and competent management team that is responsive to
stockholders' interests. The Board of Directors further believes the existence
of the Stockholder Rights Plan has helped encourage management to focus its
energies on satisfactory long-term performance.
REDEMPTION OF STOCKHOLDER RIGHTS
The Board may, pursuant to the terms of the Stockholders Rights Plan, redeem
the rights to permit an acquisition that it deems adequately reflects the value
of the Corporation and to be in the best interests of all stockholders. The
Board believes that the proper time to consider redemption of the stockholder
rights is when a specific offer is made to acquire the Corporation. To redeem
the rights now would deprive stockholders of an important protection against
unfair takeover attempts and, ultimately, reduce the long-term value for all
stockholders.
23
<PAGE>
The Board does not believe that the Stockholder Rights Plan will deter an
acquisition offer that reflects the underlying value of the Corporation and
that is fair to all stockholders. The Board believes that the redemption of the
Stockholder Rights Plan at the present time would eliminate an important
negotiating tool that is invaluable in preserving the long-term value of the
Corporation and protecting all stockholders from coercive and unfair takeover
attempts.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Your Board of Directors recommends a vote AGAINST approval of Stockholder
Proposal No. 2 on redemption of stockholder rights.
ANNUAL REPORT
The 1995 Annual Report of the Corporation, which includes audited financial
statements for the fiscal year ended September 30, 1995, accompanies this Proxy
Statement; however, that report is not part of the proxy soliciting
information.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, 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, and
those representatives will be given an opportunity to make a statement at the
meeting if they desire to do so.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1997 Annual Meeting
must be received by the Corporation by August 17, 1996 to be considered for
inclusion in the Proxy Statement and form of proxy relating to the 1997 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.
24
<PAGE>
LOGO
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
JANUARY 24, 1996
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 L. O'Donnell, III 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 6,
1995, at the Annual Meeting of Stockholders to be held on January 24, 1996 or
any reconvened meeting after an adjournment thereof.
The Board of Directors favors a
vote FOR Election of L.M.
Alberthal, Jr., J.B. Foster, R.D.
Kinder and D.C. Trauscht as Class
II Directors.
P R O X Y
COMMENTS: (change of address)
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(OVER)
/X/ Please mark your 7667
votes as in this
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 AND AGAINST STOCKHOLDER PROPOSAL NOS. 1 AND 2.
FOR WITHHELD FOR AGAINST ABSTAIN
1. FOR / / WITHHELD / / 2. Stockholder
all from all Proposal No. 1 / / / / / /
nominees nominees
3. Stockholder
Proposal No. 2 / / / / / /
For, except vote withheld from the following nominee(s):
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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.
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SIGNATURE(S) DATE
