8-KLeadership Changes

Baker Hughes Co 8-K Report, Executive Changes (Aug 4, 2017)

Filed August 4, 2017For Securities:BKR

Summary

Baker Hughes, a GE company (BHGE) filed an 8-K on August 3, 2017, detailing key executive and board compensation arrangements. The most significant development is the establishment of the Company Non-Employee Director Deferral Plan, allowing directors to receive retainers in stock or deferred stock units instead of cash, and to defer the receipt of stock underlying restricted stock units. This plan aims to align director compensation with shareholder interests and provide tax flexibility. Additionally, the filing confirms Lorenzo Simonelli's appointment as President and Chief Executive Officer and outlines his comprehensive compensation package. This includes a base salary of $1.4 million, a target bonus of 150% of base salary, and a significant annual equity grant opportunity valued at $9 million. His compensation is designed to be competitive within the market for CEO talent and includes performance-based equity awards and severance provisions in the event of termination without cause.

Key Highlights

  • 1Baker Hughes, a GE company (BHGE) established the Company Non-Employee Director Deferral Plan to allow non-employee directors to receive retainers in stock or deferred stock units, enhancing alignment with shareholders.
  • 2The Deferral Plan enables directors to defer the receipt of stock underlying restricted stock units (RSUs) for tax purposes.
  • 3Lorenzo Simonelli has officially been appointed President and Chief Executive Officer of BHGE, effective July 3, 2017.
  • 4Mr. Simonelli's compensation includes a $1.4 million base salary.
  • 5He has a target bonus opportunity of 150% of his annual base salary.
  • 6Mr. Simonelli is eligible for an annual equity grant with a target value of $9 million.
  • 7Severance benefits for Mr. Simonelli include 18 months of base pay and 1.5 times his last annual bonus or a three-year average bonus if terminated without cause.

Frequently Asked Questions

The primary purpose of the Company Non-Employee Director Deferral Plan is to provide non-employee directors with flexibility in how they receive their compensation. They can elect to receive annual retainers in stock or deferred stock units instead of cash, and they can also defer the tax implications of receiving stock underlying RSUs.

Mr. Simonelli's compensation is structured with a base salary of $1,400,000, a target bonus opportunity of 150% of his base salary, and an annual equity grant opportunity with a target value of $9,000,000. This aligns with competitive market practices for CEO compensation.

If Mr. Simonelli's employment is terminated by the Company without cause, he is eligible for severance benefits. These include 18 months of his base pay and 1.5 times the greater of his last annual bonus or the average of his annual bonuses over the preceding three years. He would also receive a pro-rated bonus for the termination year and any unpaid prior year bonus.

No, the Deferral Plan does not authorize the grant or issuance of any additional shares of Baker Hughes' Class A common stock. Any shares subject to the plan are authorized under the previously shareholder-approved Long-Term Incentive Plan (LTIP).