Summary
Baker Hughes, a GE company, announced on January 26, 2018, that its Compensation Committee approved equity incentive awards for its executive leadership team and other employees. These awards, granted under the 2017 Long-Term Incentive Plan, are designed to align executive compensation with shareholder value creation. The structure of these awards, with 75% being performance-based (50% PSUs and 25% stock options), emphasizes a direct link between executive pay and the company's financial performance and market valuation. The Performance Share Units (PSUs) are particularly noteworthy, with 50% tied to Total Shareholder Return (TSR) and 50% to Return on Invested Capital (ROIC) over a three-year period ending December 31, 2020. These PSUs will be earned based on Baker Hughes' ranking against a peer group in the PHLX Oil Service Sector index plus TechnipFMC plc. This performance-based compensation structure aims to incentivize executives to drive superior results and enhance long-term shareholder returns.
Key Highlights
- 1Baker Hughes' Compensation Committee approved equity incentive awards for executives and employees on January 22, 2018.
- 2Awards are structured with 50% Performance Share Units (PSUs), 25% Restricted Stock Units (RSUs), and 25% stock options.
- 375% of the executive awards are performance-based, linking compensation directly to company performance and stock appreciation.
- 4PSUs are split equally between Total Shareholder Return (TSR) and Return on Invested Capital (ROIC) metrics.
- 5Performance for PSUs will be measured over a three-year period ending December 31, 2020.
- 6Awards are contingent on performance relative to a defined peer group and require continued employment, with specific provisions for change in control events.
- 7The PSU awards have a target payout range of 0% to 150% of target, with minimum performance thresholds required to earn any PSUs.