What is the main purpose of the new Executive Change in Control Severance Plan?

The main purpose of the Plan is to provide financial security and benefits to key executives, including Named Executive Officers, in the event their employment is terminated as a result of a change in control of Baker Hughes. This is intended to incentivize retention and ensure a smooth transition during potential acquisition or merger scenarios.

How are the severance benefits calculated for eligible executives?

Severance benefits are calculated based on a participant's Highest Base Salary and their target bonus for the year of termination. Cash severance includes a multiple of the base salary (1.5x, 2.0x, or 2.5x depending on executive level) and a prorated bonus plus an additional bonus amount calculated using similar multipliers. The duration of these benefits also varies by executive level.

What happens regarding health insurance after an executive's employment is terminated under this plan?

Eligible executives will continue to receive accident and health insurance coverage for a period of 1.5, 2.0, or 2.5 years following their termination date, with the duration determined by their executive level. Furthermore, they may remain eligible for retiree medical coverage after this period if they would have qualified had their employment continued.

Are there any specific conditions or limitations on the payout of these benefits?

Yes, the benefits are contingent upon the executive's employment being terminated under specific circumstances related to a change in control. Additionally, for 'Specified Employees' as defined by Section 409A of the Internal Revenue Code, payments related to base salary and bonus severance may be delayed for six months following the termination date to comply with tax regulations.

BKR 8-K: Leadership Changes

Summary

Baker Hughes Company (BKR) filed an 8-K on November 3, 2020, primarily announcing the adoption of the Baker Hughes Company Executive Change in Control Severance Plan (the "Plan"). This plan, approved by the Board of Directors on October 28, 2020, is designed to provide severance benefits and other compensation to Named Executive Officers and certain other executives upon termination of employment under specific circumstances related to a change in control of the company. The Plan outlines the eligibility criteria and the types of benefits participants will receive. These benefits include cash severance payments based on highest base salary and target bonus, continued accident and health insurance coverage, and potential eligibility for retiree medical coverage. The specific amounts and duration of these benefits are tiered based on the executive's level within the organization (Level 1 or Level 2). This filing is important for investors to understand the company's executive compensation structure and its provisions for leadership retention and transition.

Key Highlights

1Baker Hughes adopted a new Executive Change in Control Severance Plan (the "Plan") effective October 28, 2020.
2The Plan provides severance benefits to Named Executive Officers and other selected executives in the event of termination following a Change in Control.
3Severance benefits include cash payments tied to Highest Base Salary and target bonus percentages, with multipliers varying by executive level (2.5x, 2.0x, 1.5x).
4Participants will receive continued accident and health insurance coverage for 1.5 to 2.5 years post-termination, depending on their executive level.
5The Plan also addresses eligibility for retiree medical coverage following the extended insurance period.
6A six-month payment delay provision is included for Specified Employees to comply with Section 409A of the Internal Revenue Code.
7The full text of the Plan is incorporated by reference as an exhibit, indicating detailed provisions are available.

Baker Hughes Co 8-K Report, Executive Changes (Nov 4, 2020)

Summary

Key Highlights

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