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EXHIBIT 10.24
BAKER HUGHES INCORPORATED
DIRECTOR COMPENSATION DEFERRAL PLAN
(As Amended and Restated)
1. Purposes of the Plan.
The Baker Hughes Incorporated Director Compensation Deferral Plan, as
amended and restated (the "Plan"), is intended to provide a means whereby
nonemployee directors of Baker Hughes Incorporated (the "Company") may defer
compensation otherwise payable and provide flexibility respecting the Company's
compensation policies.
2. Administration.
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"). The
Committee is authorized to interpret the Plan and may, from time to time, adopt
such rules and regulations, consistent with the provisions of the Plan, as it
may deem advisable to carry out the Plan. All determinations made by the
Committee shall be final. No member of the Committee shall have any right to
vote or decide upon any matter relating to himself under the Plan or to vote in
any case in which his individual right to claim any benefit under the Plan is
particularly involved. The Vice President of Human Resources of the Company
shall, as the delegatee of the Committee, be responsible for the day-to-day
administration of the Plan, including accepting deferral elections, accounting
for deferrals and distributions under the Plan. All expenses incurred in
connection with the administration of the Plan shall be borne by the Company.
3. Participation in the Plan.
(a) Eligibility. All nonemployee directors of the Company ("Directors")
shall be eligible to participate in the Plan. An individual shall be considered
to be a Director until the close of business on the day preceding the earlier of
the first date the individual (1) becomes a common-law employee of the Company
or its subsidiaries or (2) ceases to be a member of the Board for any reason
whatsoever.
(b) Election to Participate. An eligible Director may elect to become a
participant in the Plan ("Participant") by electing to defer an integral
percentage (from 1% to 100%) of his (1) annual retainer and meeting fees
("Compensation") and/or (2) retirement benefits ("Retirement Income") pursuant
to the Company's Retirement Policy covering Directors.
(1) Compensation Deferrals. Deferral elections as to
Compensation shall be made with respect to each calendar year. Any such
election shall apply to
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the Participant's Compensation for the period commencing on January 1
of the applicable calendar year and ending upon the earlier of December
31 of such calendar year or the date during such calendar year that his
directorship is terminated for any reason. Notwithstanding the
foregoing, with respect to an individual who first becomes a Director
on other than the first day of a calendar year, any such election shall
apply to the Participant's Compensation during the calendar year in
which he first becomes a Director for the period commencing on the date
he first becomes a Director and ending upon the earlier of December 31
of such calendar year or the date during such calendar year that his
directorship is terminated for any reason.
(2) Retirement Income Deferrals. Deferral elections as to
Retirement Income may be made with respect to Retirement Income
attributable to all future calendar years of service as a Director.
(c) Time and Manner of Making Elections. Unless otherwise determined by
the Committee, any election by a Participant to defer Compensation under this
Plan must be made on or before the December 1 preceding the calendar year to
which the election relates; provided, however, that with respect to the first
calendar year an individual becomes a Director, any such deferral election with
respect to such first calendar year in which he becomes a Director must be made
by the Director within thirty (30) days of the date he first becomes a Director.
Unless otherwise determined by the Committee, any election by a Participant to
defer Retirement Income for all future years of service as a Director under this
Plan must be made by a Director prior to the January 1 of the first calendar
year to which such election relates. All elections shall be made in the form and
manner prescribed by the Committee. Amounts deferred by a Participant with
respect to any calendar year pursuant to any election as provided in this
Paragraph 3 shall be referred to herein as the Participant's "Deferred
Compensation" for such calendar year.
(d) Nature of Elections. Any election to defer Compensation which may
be made by a Participant with respect to any calendar year shall be irrevocable
once made. Any election to defer Compensation which may be made by a Participant
with respect to any calendar year, unless changed by the Participant prior to
the expiration of the time for making such election with respect to each
subsequent calendar year, shall be deemed to have been made with respect to each
subsequent calendar year, respectively. Any election to defer Retirement Income
which may be made by a Participant with respect to all calendar years which are
subject to such election shall be irrevocable once made.
(e) Election of Deferral Vehicles. At the time of making a deferral
election, a Participant shall select one or more deferral vehicles ("Deferral
Vehicles") for the Participant's Deferred Compensation respecting the applicable
calendar year or years as follows:
(1) Stock Option-Related Deferral Vehicles. The Participant's
Deferred Compensation shall be exchanged for nonemployee Director stock
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options ("Stock Options") granted (i) pursuant to Article IV of the
Baker Hughes Incorporated 1993 Stock Option Plan to the extent shares
are available for options under such plan or (ii) if permitted by the
Committee, pursuant to any other plan that would permit the grant of
options under this Plan. A Participant who elects a Stock
Option-Related Deferral Vehicle shall also elect whether to receive
such Stock Options priced at (x) the fair market value on the date of
grant ("Market-Priced Stock Options") or (y) a 50% discount to the fair
market value on the date of grant ("Discounted Stock Options"). To the
extent Market-Priced Stock Options are elected, as of the last day of
each calendar quarter, the Participant's aggregate Deferred
Compensation which would otherwise have been paid during such quarter
shall be increased by a multiplier of 4.4 and then divided by the fair
market value of the Company's common stock on the last day of such
quarter to determine the number of Market-Priced Stock Options to be
granted in exchange for the Deferred Compensation. To the extent
Discounted Stock Options are elected, as of the last day of each
calendar quarter, the Participant's aggregate Deferred Compensation
which would otherwise have been paid during such quarter shall be
divided by the discounted price of the Company's common stock on the
last day of such quarter to determine the number of Discounted Stock
Options to be granted in exchange for the Deferred Compensation.
(2) Cash-Based Deferral Vehicles. The Participant's Deferred
Compensation shall be credited to an account ("Account") established by
the Committee as of the date or dates the Deferred Compensation would
otherwise have been paid. A Participant who elects a Cash-Based
Deferral Vehicle shall also elect whether to receive prime-rate
interest equivalents ("Prime Rate Equivalents") or S&P 500 earnings
equivalents ("S&P 500 Equivalents") for the deferral period commencing
on the date or dates such Deferred Compensation is credited to the
Account and ending on the designated payment date. To the extent Prime
Rate Equivalents are elected, interest equivalents will be credited to
the Participant's Account as of the last day of each calendar month
based upon the average daily balance in the Account for the month and
the prime lending rate as declared by Citibank to be in effect from
time to time. To the extent S&P 500 Equivalents are elected, the
earnings (or loss) equivalents will be credited (or debited) to the
Participant's Account as of the last day of each calendar quarter based
upon the balance in the Account as of the last day of the quarter and
the returns realized by the Standard & Poors 500 common stocks for the
quarter. A Participant who elects a Cash-Based Deferral Vehicle shall
also elect a designated payment date ("Designated Date") for lump sum
payment of the Deferred Compensation as adjusted by the Prime Rate
Equivalents or S&P 500 Equivalents, whichever is applicable. Any
Designated Date respecting Deferred Compensation subject to Prime Rate
Equivalents shall be as of the last day of a calendar month, and any
Designated Date respecting Deferred Compensation subject to S&P 500
Equivalents shall be as of the last day of a calendar quarter. Any such
Designated Date so elected may be either during the Participant's
active tenure as a Director or after cessation of the Participant's
Director status for any
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reason and may be elected either by specifying a particular date or by
selecting a date that follows the occurrence of a specified event;
provided, however, that in no event shall a Designation Date be more
than 10 years from the date the Participant's status as a Director
ceases. A Participant may also elect multiple Designated Dates
respecting payment of Deferred Compensation with the consent of the
Committee. All Deferred Compensation and interest and earnings
equivalents credited to a Participant's Account shall be nonforfeitable
pending payment as of the Designated Date.
4. Stock Options Subject to Option Plan.
All Stock Options granted in exchange for Deferred Compensation under
this Plan shall be subject to all of the applicable terms and provisions of the
plan from which each such option is granted.
5. Payment of Amounts in Accounts.
(a) Payment Generally. Except as otherwise provided in this Paragraph
5, the Deferred Compensation and interest and earnings equivalents credited to a
Participant's Account with respect to a calendar year or years, as applicable,
shall be paid in cash to the Participant in one lump sum as of the Designated
Date elected by the Participant. In the absence of a valid election of a
Designated Date by the Participant, the Designated Date shall be deemed to be
the date of cessation of the Participant's status as a Director.
(b) Payment of Simultaneous Amounts. It is recognized that a
Participant may elect to defer Compensation and/or Retirement Income with
respect to more than one calendar year, so that Deferred Compensation and
interest and earnings equivalents are credited to the Participant's Account with
respect to more than one calendar year, and the payment of such amounts with
respect to more than one calendar year may, but need not, become payable to the
Participant as of the same Designated Date.
(c) Hardship. In the event of hardship of the Participant, as
determined in the sole discretion of the Committee, all or a portion of the cash
payments that would otherwise be made on a later Designation Date under the
Paragraph 5 shall be accelerated by being made as soon as practicable following
the Committee's determination of hardship, in one lump sum. For this purpose,
hardship shall mean any emergency or necessity affecting the Participant's
personal or family affairs having a significant financial effect.
(d) Disability. In the event of the disability of the Participant, as
determined in the sole discretion of the Committee, all cash payments that would
otherwise be made on a later Designation Date under this Paragraph 5 shall be
accelerated by being made as soon as practicable following the Committee's
determination of such disability, in one lump sum. For this purpose, disability
shall mean total and permanent disability which will prevent the Participant
from engaging in meaningful business activities.
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(e) Death. In the event of the death of the Participant, all of the
cash payments that would otherwise be made on a later Designation Date under
this Paragraph 5, shall be accelerated by being made as soon as practicable
following the death of the Participant. A Participant, by written instrument
filed with the Committee in such manner and form as it may prescribe, may
designate one or more beneficiaries to receive payment of the Participant's
Deferred Compensation and interest or earnings equivalents in the event of the
death of the Participant. Any such beneficiary designation may be changed from
time to time prior to the death of the Participant. In the absence of a
beneficiary designation on file with the Committee at the time of the
Participant's death, the Deferred Compensation and interest or earnings
equivalents remaining to be paid to the Participant shall be paid to the
executor or administrator of the Participant's estate.
(f) Change in Purpose. In the event of a major tax law change or other
reason, as determined in the sole discretion of the Committee, which makes the
continued deferral of amounts under the Plan undesirable, cash payments under
this Paragraph 5 shall be accelerated by being made as soon as practicable
following the Committee's determination to discontinue deferrals, in one lump
sum.
(g) Debiting of Plan Accounts. Once Deferred Compensation and interest
or earnings equivalents have been paid, such amounts shall be debited from the
Participant's Account and shall cease to exist.
6. Prohibition Against Assignment or Encumbrance.
No right, title, interest or benefit hereunder shall ever be liable for
or charged with any of the torts or obligations of a Participant or any person
claiming under a Participant, or be subject to seizure by any creditor of a
Participant or any person claiming under a Participant. Except as to the
selection of a "designated beneficiary" in the event of death, no Participant or
any person claiming under a Participant shall have the power to anticipate or
dispose of any right, title, interest or benefit hereunder in any manner until
the same shall have been actually distributed free and clear of the terms of the
Plan.
7. Nature of the Plan.
The Plan constitutes an unfunded, unsecured liability of the Company to
provide benefits in accordance with the provisions hereof. The Company, at its
election, may fund the payment of benefits under the Plan by setting aside and
investing, in an account on the Company's books, such funds as the Company may,
from time to time, determine. Neither the establishment of the Plan, the
crediting of amounts to Plan Accounts nor the setting aside of any funds shall
be deemed to create a trust. Legal and equitable title to any funds set aside
pursuant to the Plan shall remain in the Company, and neither the Participants
nor any persons claiming under the Participants shall have any security or other
interest in such funds. Any funds so set aside or acquired shall remain subject
to the claims of the creditors of the Company, present and future.
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8. Effective Date, Amendment and Termination of Plan.
The Plan shall be amended and restated effective as of November 1,
1998. The Committee shall have the right to alter or amend the Plan or any part
thereof, from time to time, except that no alteration or amendment may be made
which would impair the rights of Participants with respect to periods prior to
the date such alteration or amendment is effected without the consent of such
Participants. The Committee may terminate the Plan at any time with respect to
periods following the date such termination is effected.
9. Reorganization.
The Company shall not merge or consolidate with any other entity or
entities, liquidate, dissolve, reorganize, or sell substantially all of its
assets and business unless and until a succeeding or continuing entity or
entities agrees to assume and discharge the obligations of the Company under
this Agreement. Upon the occurrence of such an event, the term "Company" as used
in this Agreement shall be deemed to refer to such successor or survivor entity
or entities.
10. Laws Governing.
This Plan shall be construed in accordance with, and governed by, the
laws of the State of Texas.